Question 1

In Canada,the distinguishing feature of a corporation is that

Accepted Answer

A)  there is no legal difference between the corporation and its owners. 
B)  it is a legally defined, artificial being, separate from its owners. 
C)  it spreads liability for its corporate obligations to all shareholders. 
D)  it provides limited liability only to small shareholders. 
A)  there is no legal difference between the corporation and its owners. 
B)  it is a legally defined, artificial being, separate from its owners. 
C)  it spreads liability for its corporate obligations to all shareholders. 
D)  it provides limited liability only to small shareholders. B

Question 2

In Canada,the dividend tax credit gives some relief by

Accepted Answer

A)  effectively giving a lower tax rate on dividend income than on other sources of income. 
B)  effectively giving a higher tax rate on dividend income than on other sources of income. 
C)  effectively giving the same tax rate on dividend income as on other sources of income. 
D)  effectively giving a tax rate of zero on dividend income compared to other sources of income. 
A)  effectively giving a lower tax rate on dividend income than on other sources of income. 
B)  effectively giving a higher tax rate on dividend income than on other sources of income. 
C)  effectively giving the same tax rate on dividend income as on other sources of income. 
D)  effectively giving a tax rate of zero on dividend income compared to other sources of income. A

Question 3

The Principal-Agent Problem arises

Accepted Answer

A)  because managers have little incentive to work in the interest of shareholders when this means working against their own self-interest. 
B)  because of the separation of ownership and control in a corporation. 
C)  Both A and B. 
D)  None of the above. 
A)  because managers have little incentive to work in the interest of shareholders when this means working against their own self-interest. 
B)  because of the separation of ownership and control in a corporation. 
C)  Both A and B. 
D)  None of the above. C

Question 4

What are your net proceeds if you purchased 2,500 shares of XYZ stock on November 11th and then sold them a week later on November 18th?

Accepted Answer

Sell at bid price 11/18 = 2,500 × $25.93

Question 5

Explain the benefits of incorporation.

Accepted Answer

1.Limited liability
2.Unlimite

Question 6

Which of the following organization forms earns the most revenue?

Accepted Answer

A)  Privately Owned Corporation 
B)  Limited Partnership 
C)  Publicly Owned Corporation 
D)  Limited Liability Company 
A)  Privately Owned Corporation 
B)  Limited Partnership 
C)  Publicly Owned Corporation 
D)  Limited Liability Company

Question 7

In 2011 what position was the Toronto Stock Exchange,TSX,ranked based on the value of trades in U.S.dollars?

Accepted Answer

A)  The 10th position 
B)  The 8th position 
C)  The 20th position 
D)  None of the above 
A)  The 10th position 
B)  The 8th position 
C)  The 20th position 
D)  None of the above

Question 8

A sole proprietorship is owned by

Accepted Answer

A)  one person. 
B)  two or more people. 
C)  shareholders. 
D)  bankers. 
A)  one person. 
B)  two or more people. 
C)  shareholders. 
D)  bankers.

Question 9

A ________ is when a rich individual or organization purchases a large fraction of the stock of a poorly performing firm and in doing so gets enough votes to replace the board of directors and the CEO.

Accepted Answer

A)  shareholder proposal 
B)  leveraged buyout 
C)  shareholder action 
D)  hostile takeover 
A)  shareholder proposal 
B)  leveraged buyout 
C)  shareholder action 
D)  hostile takeover

Question 10

You own 100 shares of a publicly traded Canadian Corporation.The corporation earns $5.00 per share before taxes.Once the corporation has paid any corporate taxes that are due,it will distribute the rest of its earnings to its shareholders in the form of a dividend.If the corporate tax rate is 40% and your personal tax rate on (both dividend and non-dividend)income is 30%,then how much money is left for you after all taxes have been paid?

Accepted Answer

A)  $210 
B)  $300 
C)  $350 
D)  $500 
A)  $210 
B)  $300 
C)  $350 
D)  $500

Question 11

Which of the following statements is most correct?

Accepted Answer

A)  An advantage to incorporation is that it allows for less regulation of the business. 
B)  An advantage of a corporation is that it is subject to double taxation. 
C)  Unlike a partnership, a disadvantage of a corporation is that it has limited liability. 
D)  Corporations face more regulations when compared to partnerships. 
A)  An advantage to incorporation is that it allows for less regulation of the business. 
B)  An advantage of a corporation is that it is subject to double taxation. 
C)  Unlike a partnership, a disadvantage of a corporation is that it has limited liability. 
D)  Corporations face more regulations when compared to partnerships.

Question 12

You own 100 shares of a Canadian Income Trust Corporation.The corporation earns $5.00 per share before taxes.Once the corporation has paid any corporate taxes that are due,it will distribute the rest of its earnings to its shareholders in the form of a dividend.If the corporate tax rate is 40% and your personal tax rate on (both dividend and non-dividend)income is 30%,then how much money is left for you after all taxes have been paid?

Accepted Answer

A)  $210 
B)  $300 
C)  $350 
D)  $500 
A)  $210 
B)  $300 
C)  $350 
D)  $500

Question 13

In Canada,a limited liability partnership,LLP,is essentially

Accepted Answer

A)  a limited partnership without limited partners. 
B)  a limited partnership without a general partner. 
C)  just another name for a limited partnership. 
D)  just another name for a corporation. 
A)  a limited partnership without limited partners. 
B)  a limited partnership without a general partner. 
C)  just another name for a limited partnership. 
D)  just another name for a corporation.

Question 14

In 2006,the Canadian government effectively neutralized the tax advantages that had existed for most income trusts,relative to firms set up as corporations. The advantages that existed for income trusts prior to these changes were that

Accepted Answer

A)  income trusts avoided double taxation in that the Canada Revenue Agency did not collect corporate taxes but rather collected only personal taxes from income trust unit holders. 
B)  income trusts effectively afforded unlimited liability to unit holders while corporate shareholders could face unlimited liability. 
C)  while double taxation existed for both income trusts and corporations, the net tax paid by income trust unit holders was in most cases less than that paid by corporate shareholders. 
D)  the changes introduced in 2006 eliminated double taxation for corporations, thereby making the taxation of income trusts and corporations substantially equivalent. 
A)  income trusts avoided double taxation in that the Canada Revenue Agency did not collect corporate taxes but rather collected only personal taxes from income trust unit holders. 
B)  income trusts effectively afforded unlimited liability to unit holders while corporate shareholders could face unlimited liability. 
C)  while double taxation existed for both income trusts and corporations, the net tax paid by income trust unit holders was in most cases less than that paid by corporate shareholders. 
D)  the changes introduced in 2006 eliminated double taxation for corporations, thereby making the taxation of income trusts and corporations substantially equivalent.

Question 15

One of the major reasons that corporations have a principal-agent problem is that

Accepted Answer

A)  management is less transparent. 
B)  they have an inefficient and incompetent management team. 
C)  direct control and ownership are often separate. 
D)  there is a lack of communication between the owners and the management team. 
A)  management is less transparent. 
B)  they have an inefficient and incompetent management team. 
C)  direct control and ownership are often separate. 
D)  there is a lack of communication between the owners and the management team.

Question 16

The two common measures used to rank stock markets worldwide are

Accepted Answer

A)  the total number of all domestic corporations listed on the exchange and the total value of the volume of shares traded on the exchange at the end of each year. 
B)  the total value of all domestic corporations listed on the exchange and the total number of shares traded on the exchange at the end of each year. 
C)  the total value of all domestic corporations listed on the exchange and the total value of the volume of shares traded on the exchange at the end of each year. 
D)  the total value of all foreign corporations listed on the exchange and the total value of the volume of shares traded on the exchange at the end of each year. 
A)  the total number of all domestic corporations listed on the exchange and the total value of the volume of shares traded on the exchange at the end of each year. 
B)  the total value of all domestic corporations listed on the exchange and the total number of shares traded on the exchange at the end of each year. 
C)  the total value of all domestic corporations listed on the exchange and the total value of the volume of shares traded on the exchange at the end of each year. 
D)  the total value of all foreign corporations listed on the exchange and the total value of the volume of shares traded on the exchange at the end of each year.

Question 17

The ultimate goal of financial management in corporations is

Accepted Answer

A)  to maximize annual profit. 
B)  to maximize the benefit of the employees. 
C)  to maximize the interest of the communities. 
D)  to maximize shareholder wealth. 
A)  to maximize annual profit. 
B)  to maximize the benefit of the employees. 
C)  to maximize the interest of the communities. 
D)  to maximize shareholder wealth.

Question 18

One of the major characteristics of a limited liability partnership,LLP,in Canada is

Accepted Answer

A)  the limitation on a partner's liability is only in cases related to actions of negligence by other partners or those supervised by other partners. 
B)  any partner will not be liable for his or her negligence at any time. 
C)  any partners will be only liable for other partners' negligence. 
D)  none of the above 
A)  the limitation on a partner's liability is only in cases related to actions of negligence by other partners or those supervised by other partners. 
B)  any partner will not be liable for his or her negligence at any time. 
C)  any partners will be only liable for other partners' negligence. 
D)  none of the above

Question 19

Use the table for the question(s) below.
Consider the following two quotes for XYZ stock:
  
-How much would you have to pay to purchase 100 shares of XYZ stock on November 18th?

Accepted Answer

A)  $2,520 
B)  $2,525 
C)  $2,593 
D)  $2,600 
A)  $2,520 
B)  $2,525 
C)  $2,593 
D)  $2,600

Question 20

In Canada,which of the following business organization forms cannot avoid double taxation?

Accepted Answer

A)  Limited Partnership 
B)  Publicly Traded Corporation 
C)  Privately Owned Corporation 
D)  Limited Liability Company 
A)  Limited Partnership 
B)  Publicly Traded Corporation 
C)  Privately Owned Corporation 
D)  Limited Liability Company

Exam 1: The Corporation

In Canada,the distinguishing feature of a corporation is that

In Canada,the dividend tax credit gives some relief by

The Principal-Agent Problem arises

What are your net proceeds if you purchased 2,500 shares of XYZ stock on November 11th and then sold them a week later on November 18th?

Explain the benefits of incorporation.

Which of the following organization forms earns the most revenue?

In 2011 what position was the Toronto Stock Exchange,TSX,ranked based on the value of trades in U.S.dollars?

A sole proprietorship is owned by

A ________ is when a rich individual or organization purchases a large fraction of the stock of a poorly performing firm and in doing so gets enough votes to replace the board of directors and the CEO.

Which of the following statements is most correct?

In Canada,a limited liability partnership,LLP,is essentially

In 2006,the Canadian government effectively neutralized the tax advantages that had existed for most income trusts,relative to firms set up as corporations. The advantages that existed for income trusts prior to these changes were that

One of the major reasons that corporations have a principal-agent problem is that

The two common measures used to rank stock markets worldwide are

The ultimate goal of financial management in corporations is

One of the major characteristics of a limited liability partnership,LLP,in Canada is

Use the table for the question(s) below. Consider the following two quotes for XYZ stock: -How much would you have to pay to purchase 100 shares of XYZ stock on November 18th?

In Canada,which of the following business organization forms cannot avoid double taxation?

Introduction to Financial Statement Analysis

Arbitrage and Financial Decision Making

The Time Value of Money

Interest Rates

Valuing Bonds

Valuing Stocks

Investment Decision Rules

Fundamentals of Capital Budgeting

Capital Markets and the Pricing of Risk

Optimal Portfolio Choice and the Capital Asset Pricing Model

Estimating the Cost of Capital

Investor Behaviour and Capital Market Efficiency

Financial Options

Option Valuation

Real Options

Capital Structure in a Perfect Market

Debt and Taxes

Financial Distress, managerial Incentives, and Information

Payout Policy

Capital Budgeting and Valuation With Leverage

Valuation and Financial Modelling: a Case Study

The Mechanics of Raising Equity Capital

Debt Financing

Leasing

Working Capital Management

Short-Term Financial Planning

Mergers and Acquisitions

Corporate Governance

Risk Management

International Corporate Finance

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