Question 1

To calculate the taxes owing on dividends received from Canadian corporations,investors must undertake the following calculations:

Accepted Answer

A) Gross up the dividend received; apply this amount to their marginal tax rate; and received the federal and provincial dividend tax credit. 
B) Gross up the dividend received; apply this amount to their marginal tax rate; and received the federal tax credit. 
C) Gross up the dividend received; apply this amount to their average tax rate; and received the federal and provincial dividend tax credit. 
D) Apply the amount of the dividend received to their marginal tax rate and received the federal and provincial dividend tax credit. 
E) Apply the amount of the dividend received to their average tax rate and received the federal and provincial dividend tax credit. 
A) Gross up the dividend received; apply this amount to their marginal tax rate; and received the federal and provincial dividend tax credit. 
B) Gross up the dividend received; apply this amount to their marginal tax rate; and received the federal tax credit. 
C) Gross up the dividend received; apply this amount to their average tax rate; and received the federal and provincial dividend tax credit. 
D) Apply the amount of the dividend received to their marginal tax rate and received the federal and provincial dividend tax credit. 
E) Apply the amount of the dividend received to their average tax rate and received the federal and provincial dividend tax credit.

Question 2

Stella places a market order with her broker to buy 1000 shares of OneWorld Corp.The broker buys 1000 shares at $15.40 each,and sells them to Stella at $15.55 each.He also charges a commission of $12.00.What is bid-ask spread in this case?

Accepted Answer

A) $15,400 
B) $15,562 
C) $172 
D) $150 
E) $162 
A) $15,400 
B) $15,562 
C) $172 
D) $150 
E) $162

Question 3

A company that produces racing motorbikes has several models that sell well within the motorcycle racing community and that are very profitable for the company.Despite having a profitable product,why must this company take care to ensure that it has sufficient cash on hand to meet its obligations?

Accepted Answer

A) Profits from the sales of popular models will be lost when returned to the shareholders in the form of dividends. 
B) New models will require a lot of money to develop and bring to market before they generate any revenue. 
C) The company will have built up debts which must be repaid in order to bring the current models to market. 
D) Equity must be raised to finance the development of new models to replace the existing models. 
E) This will enable the company to maintain a high share price for its stock. 
A) Profits from the sales of popular models will be lost when returned to the shareholders in the form of dividends. 
B) New models will require a lot of money to develop and bring to market before they generate any revenue. 
C) The company will have built up debts which must be repaid in order to bring the current models to market. 
D) Equity must be raised to finance the development of new models to replace the existing models. 
E) This will enable the company to maintain a high share price for its stock.

Question 4

What is the most common way that principal-agent problems are addressed in most corporations?

Accepted Answer

A) by minimizing the number of decisions that a manager makes where there is a conflict between the managers interests and those of the shareholders 
B) by terminating the employment of employees who are found to have put their own interests above those of the company 
C) by using disinterested outside bodies to adjudicate between managers and shareholders when such conflicts arise 
D) by prosecuting managers who have been found to have illegally used company moneys for their own benefit 
E) by paying the managers high salaries to encourage them to act in the company's interests. 
A) by minimizing the number of decisions that a manager makes where there is a conflict between the managers interests and those of the shareholders 
B) by terminating the employment of employees who are found to have put their own interests above those of the company 
C) by using disinterested outside bodies to adjudicate between managers and shareholders when such conflicts arise 
D) by prosecuting managers who have been found to have illegally used company moneys for their own benefit 
E) by paying the managers high salaries to encourage them to act in the company's interests.

Question 5

Why do many Canadian companies list on the NYSE in addition to the TSX?

Accepted Answer

A) To raise funds in $US. 
B) As a signal of their higher quality. 
C) To avoid Canadian taxes. 
D) They have grown too big for the TSX. 
E) It is the first step in moving their operations to the US. 
A) To raise funds in $US. 
B) As a signal of their higher quality. 
C) To avoid Canadian taxes. 
D) They have grown too big for the TSX. 
E) It is the first step in moving their operations to the US.

Question 6

You own 50 units of a real estate investment trust (REIT)and 50 shares of a public corporation.The REIT earns $6.00 per unit.The corporation earns $4.00 per share before taxes.The corporate tax rate is 25%,your personal tax rate is 35%,and the tax rate on dividend income is 15%.What is the total after-tax income you receive,if your REIT holdings are outside of a TFSA,and your corporation shares are held inside a TFSA?

Accepted Answer

A) $273.75 
B) $318.75 
C) $322.50 
D) $345.00 
E) $450.00 
A) $273.75 
B) $318.75 
C) $322.50 
D) $345.00 
E) $450.00

Question 7

What is the term for the applicable price that the seller gets when he sells a stock on the exchange?

Accepted Answer

The seller gets the

Question 8

Which of the following are major duties of a financial manager? I.To make investment decisions

Accepted Answer

A) I only 
B) I and II only 
C) I and III only 
D) II and III only 
E) I,II and III 
A) I only 
B) I and II only 
C) I and III only 
D) II and III only 
E) I,II and III

Question 9

What is the bid-ask spread?

Accepted Answer

A) the difference between the lowest price being quoted to sell a stock and the highest price being quoted to buy that stock 
B) all of the costs and fees that a stock exchange charges in order to process a transaction 
C) the rise or fall in the value of a stock between the time it is acquired by an investor and sold by that investor 
D) the difference in the selling price of a stock between different exchanges 
E) the change in the price of a stock from the market's open to the market's close 
A) the difference between the lowest price being quoted to sell a stock and the highest price being quoted to buy that stock 
B) all of the costs and fees that a stock exchange charges in order to process a transaction 
C) the rise or fall in the value of a stock between the time it is acquired by an investor and sold by that investor 
D) the difference in the selling price of a stock between different exchanges 
E) the change in the price of a stock from the market's open to the market's close

Question 10

How do the shareholders of most corporations exercise their control of that corporation?

Accepted Answer

A) by voting on issues that concern them 
B) by electing members of a board of directors 
C) by vetting the decisions of the board of directors 
D) by providing oversight of the day-to-day running of the corporation 
E) by hiring other shareholders to run the corporation 
A) by voting on issues that concern them 
B) by electing members of a board of directors 
C) by vetting the decisions of the board of directors 
D) by providing oversight of the day-to-day running of the corporation 
E) by hiring other shareholders to run the corporation

Question 11

What are the main differences between a partnership and sole proprietorship?

Accepted Answer

While a sole proprietor has the same ide

Question 12

Why is it in general difficult to determine the market price of a private corporation's shares at any point in time?

Accepted Answer

A) It is difficult to obtain enough information to accurately value such a company. 
B) The price of its shares is fixed by the owners. 
C) It has a limited number of owners. 
D) There is no organized market for its shares. 
E) Buyers do not wish to reveal their bid price. 
A) It is difficult to obtain enough information to accurately value such a company. 
B) The price of its shares is fixed by the owners. 
C) It has a limited number of owners. 
D) There is no organized market for its shares. 
E) Buyers do not wish to reveal their bid price.

Question 13

Which of the following is an advantage of a sole proprietorship?

Accepted Answer

A) double taxation 
B) ease of setup 
C) limited liability 
D) separation of ownership and control 
E) the ability to raise substantial amounts of capital 
A) double taxation 
B) ease of setup 
C) limited liability 
D) separation of ownership and control 
E) the ability to raise substantial amounts of capital

To calculate the taxes owing on dividends received from Canadian corporations,investors must undertake the following calculations:

Stella places a market order with her broker to buy 1000 shares of OneWorld Corp.The broker buys 1000 shares at $15.40 each,and sells them to Stella at $15.55 each.He also charges a commission of $12.00.What is bid-ask spread in this case?

A company that produces racing motorbikes has several models that sell well within the motorcycle racing community and that are very profitable for the company.Despite having a profitable product,why must this company take care to ensure that it has sufficient cash on hand to meet its obligations?

What is the most common way that principal-agent problems are addressed in most corporations?

Why do many Canadian companies list on the NYSE in addition to the TSX?

What is the term for the applicable price that the seller gets when he sells a stock on the exchange?

Which of the following are major duties of a financial manager? I.To make investment decisions

What is the bid-ask spread?

How do the shareholders of most corporations exercise their control of that corporation?

What are the main differences between a partnership and sole proprietorship?

Why is it in general difficult to determine the market price of a private corporation's shares at any point in time?

Which of the following is an advantage of a sole proprietorship?

Introduction to Financial Statement Analysis

The Valuation Principle: the Foundation of Financial Decision Making

The Time Value of Money

Interest Rates

Bonds

Valuing Stocks

Investment Decision Rules

Fundamentals of Capital Budgeting

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

Determining the Cost of Capital

Risk and the Pricing of Options

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modelling and Pro Forma Analysis

Working Capital Management

Short-Term Financial Planning

Risk Management

International Corporate Finance

Leasing

Mergers and Acquisitions

Corporate Governance

Filters

Exam 1: Corporate Finance and the Financial Manager

To calculate the taxes owing on dividends received from Canadian corporations,investors must undertake the following calculations:

Stella places a market order with her broker to buy 1000 shares of OneWorld Corp.The broker buys 1000 shares at $15.40 each,and sells them to Stella at $15.55 each.He also charges a commission of $12.00.What is bid-ask spread in this case?

A company that produces racing motorbikes has several models that sell well within the motorcycle racing community and that are very profitable for the company.Despite having a profitable product,why must this company take care to ensure that it has sufficient cash on hand to meet its obligations?

What is the most common way that principal-agent problems are addressed in most corporations?

Why do many Canadian companies list on the NYSE in addition to the TSX?

What is the term for the applicable price that the seller gets when he sells a stock on the exchange?

Which of the following are major duties of a financial manager? I.To make investment decisions

What is the bid-ask spread?

How do the shareholders of most corporations exercise their control of that corporation?

What are the main differences between a partnership and sole proprietorship?

Why is it in general difficult to determine the market price of a private corporation's shares at any point in time?

Which of the following is an advantage of a sole proprietorship?

Introduction to Financial Statement Analysis

The Valuation Principle: the Foundation of Financial Decision Making

The Time Value of Money

Interest Rates

Bonds

Valuing Stocks

Investment Decision Rules

Fundamentals of Capital Budgeting

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

Determining the Cost of Capital

Risk and the Pricing of Options

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modelling and Pro Forma Analysis

Working Capital Management

Short-Term Financial Planning

Risk Management

International Corporate Finance

Leasing

Mergers and Acquisitions

Corporate Governance

Filters