Question 1

In Canada,which of the following organization forms accounts for the greatest number of firms?

Accepted Answer

A)  Limited Liability Partnership 
B)  Limited Partnership 
C)  Sole Proprietorship 
D)  Publicly Traded Corporation 
A)  Limited Liability Partnership 
B)  Limited Partnership 
C)  Sole Proprietorship 
D)  Publicly Traded Corporation

Question 2

An investment is said to be liquid if the investment

Accepted Answer

A)  has large day-to-day fluctuations in price. 
B)  has a large bid-ask spread. 
C)  can easily be converted into cash. 
D)  is traded on a stock exchange. 
A)  has large day-to-day fluctuations in price. 
B)  has a large bid-ask spread. 
C)  can easily be converted into cash. 
D)  is traded on a stock exchange.

Question 3

What strategies are available to shareholders to help ensure that managers are motivated to act in the interest of the shareholders rather than their own interest?

Accepted Answer

1.The threat of a ho

Question 4

What type of company trades on an organized stock exchange?

Accepted Answer

A)  a limited liability company 
B)  a private company 
C)  a crown corporation 
D)  a public company 
A)  a limited liability company 
B)  a private company 
C)  a crown corporation 
D)  a public company

Question 5

Which of the following statements is false?

Accepted Answer

A)  On the NASDAQ, stocks can and do have multiple market makers who compete with each other. Each market maker must post bid and ask prices in the NASDAQ network where they can be viewed by all participants. 
B)  Bid prices exceed ask prices. 
C)  Because customers always buy at the ask price and sell at the bid price, the bid-ask spread is a transaction cost investors have to pay in order to trade. 
D)  On the floor of the NYSE, market makers (known on the NYSE as specialists) match buyers and sellers. 
A)  On the NASDAQ, stocks can and do have multiple market makers who compete with each other. Each market maker must post bid and ask prices in the NASDAQ network where they can be viewed by all participants. 
B)  Bid prices exceed ask prices. 
C)  Because customers always buy at the ask price and sell at the bid price, the bid-ask spread is a transaction cost investors have to pay in order to trade. 
D)  On the floor of the NYSE, market makers (known on the NYSE as specialists) match buyers and sellers.

Question 6

Canada Revenue Agency,CRA,allows an exemption from double taxation for certain flow through entities where all income produced by the business flows to the investors and virtually no earnings are retained within the business.These entities are called

Accepted Answer

A)  Canadian Federal Crown Corporations. 
B)  Canadian Controlled Corporations. 
C)  Income Trust Corporations. 
D)  Foreign Controlled Corporations. 
A)  Canadian Federal Crown Corporations. 
B)  Canadian Controlled Corporations. 
C)  Income Trust Corporations. 
D)  Foreign Controlled Corporations.

Question 7

Which of the following is/are subject to double taxation in Canada?

Accepted Answer

A)  Corporation 
B)  Partnership 
C)  Sole proprietorship 
D)  Both A and B 
A)  Corporation 
B)  Partnership 
C)  Sole proprietorship 
D)  Both A and B

Question 8

You are a shareholder in a publicly owned corporation.This corporation earns $4 per share before taxes.After it has paid taxes,it will distribute the remainder of its earnings to you as a dividend.The dividend is income to you,so you will then pay taxes on these earnings.The corporate tax rate is 35% and your tax rate on dividend income is 15%.The effective tax rate on your share of the corporations earnings is closest to:

Accepted Answer

A)  15% 
B)  35% 
C)  45% 
D)  50% 
A)  15% 
B)  35% 
C)  45% 
D)  50%

Question 9

In 2011,the largest stock market by domestic capitalization in the world was

Accepted Answer

A)  the London Stock Exchange. 
B)  the NASDAQ. 
C)  the American Stock Exchange. 
D)  the New York Stock Exchange. 
A)  the London Stock Exchange. 
B)  the NASDAQ. 
C)  the American Stock Exchange. 
D)  the New York Stock Exchange.

Question 10

In a corporation,the ultimate decisions regarding business matters are made by

Accepted Answer

A)  the Board of Directors. 
B)  debt holders. 
C)  shareholders. 
D)  investors. 
A)  the Board of Directors. 
B)  debt holders. 
C)  shareholders. 
D)  investors.

Question 11

Explain the main differences between the NYSE and NASDAQ stock markets.

Accepted Answer

Key points:
NYSE has a physical location

Question 12

Which of the following is/are an advantage(s)of incorporation?

Accepted Answer

A)  Access to capital markets 
B)  Limited liability 
C)  Unlimited life 
D)  All of the above 
A)  Access to capital markets 
B)  Limited liability 
C)  Unlimited life 
D)  All of the above

Question 13

Which of the following statements regarding limited partnerships is true?

Accepted Answer

A)  There is no limit on a limited partner's liability. 
B)  A limited partner's liability is limited by the amount of his investment. 
C)  A limited partner is not liable until all of the assets of the general partners have been exhausted. 
D)  A general partner's liability is limited by the amount of his investment. 
A)  There is no limit on a limited partner's liability. 
B)  A limited partner's liability is limited by the amount of his investment. 
C)  A limited partner is not liable until all of the assets of the general partners have been exhausted. 
D)  A general partner's liability is limited by the amount of his investment.

Question 14

Which of the following statements is correct?

Accepted Answer

A)  The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in the world. 
B)  The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in North America. 
C)  The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in Canada. 
D)  The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in Toronto. 
A)  The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in the world. 
B)  The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in North America. 
C)  The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in Canada. 
D)  The TSX is an electronic exchange and investors can post orders onto the TSX trading system from anywhere in Toronto.

Question 15

In 2011,what position was the Toronto Stock Exchange,TSX,ranked based on domestic market capitalization in U.S.dollars?

Accepted Answer

A)  The 8th position 
B)  The 14th position 
C)  The 20th position 
D)  None of the above 
A)  The 8th position 
B)  The 14th position 
C)  The 20th position 
D)  None of the above

Question 16

The person charged with running the corporation by instituting the rules and policies set by the board of directors is called

Accepted Answer

A)  the Chief Operating Officer. 
B)  the Company President. 
C)  the Chief Executive Officer. 
D)  the Chief Financial Officer. 
A)  the Chief Operating Officer. 
B)  the Company President. 
C)  the Chief Executive Officer. 
D)  the Chief Financial Officer.

Question 17

Use the table for the question(s) below.
Consider the following two quotes for XYZ stock:
  
-How much would you receive if you sold 200 shares of XYZ stock on November 11th?

Accepted Answer

A)  $5,050 
B)  $5,040 
C)  $5,186 
D)  $5,200 
A)  $5,050 
B)  $5,040 
C)  $5,186 
D)  $5,200

Question 18

Stocks trading in a large electronic exchange such as the TSX will normally

Accepted Answer

A)  experience a narrow bid-ask range. 
B)  experience a wide bid-ask range. 
C)  be thinly traded. 
D)  incur high transaction costs. 
A)  experience a narrow bid-ask range. 
B)  experience a wide bid-ask range. 
C)  be thinly traded. 
D)  incur high transaction costs.

Question 19

Which of the following is NOT an advantage of a sole proprietorship?

Accepted Answer

A)  Single taxation 
B)  Ease of setup 
C)  Limited liability 
D)  No separation of ownership and control 
A)  Single taxation 
B)  Ease of setup 
C)  Limited liability 
D)  No separation of ownership and control

Question 20

If shareholders are unhappy with a CEO's performance,they are most likely to

Accepted Answer

A)  buy more shares in an effort to gain control of the firm. 
B)  file a shareholder resolution. 
C)  replace the CEO through a grassroots shareholder uprising. 
D)  sell their shares. 
A)  buy more shares in an effort to gain control of the firm. 
B)  file a shareholder resolution. 
C)  replace the CEO through a grassroots shareholder uprising. 
D)  sell their shares.

Exam 1: The Corporation

In Canada,which of the following organization forms accounts for the greatest number of firms?

An investment is said to be liquid if the investment

What strategies are available to shareholders to help ensure that managers are motivated to act in the interest of the shareholders rather than their own interest?

What type of company trades on an organized stock exchange?

Which of the following statements is false?

Canada Revenue Agency,CRA,allows an exemption from double taxation for certain flow through entities where all income produced by the business flows to the investors and virtually no earnings are retained within the business.These entities are called

Which of the following is/are subject to double taxation in Canada?

In 2011,the largest stock market by domestic capitalization in the world was

In a corporation,the ultimate decisions regarding business matters are made by

Explain the main differences between the NYSE and NASDAQ stock markets.

Which of the following is/are an advantage(s)of incorporation?

Which of the following statements regarding limited partnerships is true?

Which of the following statements is correct?

In 2011,what position was the Toronto Stock Exchange,TSX,ranked based on domestic market capitalization in U.S.dollars?

The person charged with running the corporation by instituting the rules and policies set by the board of directors is called

Use the table for the question(s) below. Consider the following two quotes for XYZ stock: -How much would you receive if you sold 200 shares of XYZ stock on November 11th?

Stocks trading in a large electronic exchange such as the TSX will normally

Which of the following is NOT an advantage of a sole proprietorship?

If shareholders are unhappy with a CEO's performance,they are most likely to

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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