Question 1

Ann is interested in purchasing Ted's factory. Since Ann is a poor negotiator, she hires Mary to negotiate the purchase price. Identify the parties to this transaction.

Accepted Answer

A)   Mary is the principal and Ann is the agent.
B)   Ted is the principal and Ann is the agent.
C)   Mary is the agent while Ted and Ann together are principals.
D)   Ann is the principal and Mary is the agent.
E)   Ann is the principal and Ted is the agent.F) All of the above
G) A) and D)

Question 2

The secondary market is:

Accepted Answer

A)   The market for the original sale of securities by governments and corporations.
B)   The market in which dealers buy and sell for themselves, at their own risk.
C)   The market in which purchasers are matched with those who wish to sell.
D)   A market which has no central Location.
E)   The market in which securities are bought and sold after original sale.F) D) and E)
G) B) and E)

Question 3

Sue Folker wants to start a new business decommissioning nuclear warheads and reactors. The work will involve signiﬁcant hazards, and Sue is concerned about protecting her personal wealth
From any losses the business might incur. If she is to be the majority owner of the business how
Should she structure it?

Accepted Answer

A)   As a corporation.
B)   As a general partnership.
C)   As a limited partnership.
D)   As a sole proprietorship.
E)   As a real estate investment trust.F) C) and D)
G) B) and E)

Question 4

The triple bottom line measures:

Accepted Answer

A)   Measures a company's economic, social and environmental performance.
B)   Measures a company's performance within its three ﬁnancial statements.
C)   Measures a company's performance within the primary, secondary and tertiary markets.
D)   Measures a company's performance of its revenues, gross proﬁt and net income against its annual strategic plan.
E)   Measures a company's performance against the top three competitors in the market.F) B) and D)
G) B) and C)

Question 5

The area of corporate ﬁnance concerned purchasing and selling stocks and bonds is called:

Accepted Answer

A)   Investments.
B)   Municipal ﬁnance.
C)   International ﬁnance.
D)   Institutional ﬁnance.
E)   Strategic ﬁnance.F) None of the above
G) A) and D)

Question 6

A sole proprietorship is best deﬁned as a business owned by:

Accepted Answer

A)   A single individual who has limited liability for the ﬁrm's debts.
B)   A single individual who has unlimited liability for the ﬁrm's debts.
C)   Individuals who enjoy limited liability.
D)   One or more individuals who have agreed to accept unlimited liability for the ﬁrm.
E)   An individual for less than ten years.F) B) and E)
G) All of the above

Question 7

Working capital management refers to:

Accepted Answer

A)   The types of stock issued.
B)   The amount of Long-term debt.
C)   The mixture of debt and equity.
D)   The types of Long-term investments made.
E)   The levels of cash and inventory held.F) All of the above
G) A) and C)

Question 8

The treasurer can be deﬁned as the person who is generally responsible for overseeing the _____ of a ﬁrm.

Accepted Answer

A)   Tax matters.
B)   Data processing functions.
C)   Financial accounting.
D)   Cost accounting.
E)   Financial planning.F) A) and D)
G) B) and C)

Question 9

The purchase and sale of shares between investors are done in which market?

Accepted Answer

A)   Secondary market.
B)   Foreign exchange market.
C)   Debt market.
D)   Derivatives market.
E)   Tertiary market.F) C) and D)
G) A) and B)

Question 10

Which one of the following best illustrates the agency problem?

Accepted Answer

A)   An employee offers a suggestion which will save the company money and reduce the stress of his job.
B)   The company creates a management bonus program whereby managers are rewarded when the market price of the ﬁrm's stock rises.
C)   Management rejects a merger which was desired by the shareholders.
D)   Management expands its operations overseas which is favourably received by the ﬁnancial markets.
E)   Management reduces the risk level of the ﬁrm while maintaining a steady stock price.F) A) and E)
G) A) and D)

Question 11

The corporate oﬃcer generally responsible for tasks related to tax management, cost accounting, ﬁnancial accounting, and data processing is the:

Accepted Answer

A)   Corporate Treasurer.
B)   Director.
C)   Corporate Controller.
D)   Chairman of the Board.
E)   Vice President of Operations.F) D) and E)
G) B) and E)

Question 12

The treasurer and the controller of a corporation generally report to the:

Accepted Answer

A)   Board of directors.
B)   Chairman of the board.
C)   Chief executive oﬃcer.
D)   President.
E)   Vice president of ﬁnance.F) D) and E)
G) C) and D)

Question 13

A market where trading takes place directly between buyers and sellers is called a(n) :

Accepted Answer

A)   Primary market.
B)   OTC market.
C)   Dealer market.
D)   Auction market.
E)   Liquidation market.F) A) and B)
G) D) and E)

Question 14

Capital structure determines the level of current assets that is required to maintain the ﬁrm's
operational level.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following statements is correct concerning the TSX?

Accepted Answer

A)   A ﬁrm is expected to have a market value for its publicly held shares of at least $4 million to be listed on the TSX.
B)   The TSX is the largest dealer market for listed securities in Canada.
C)   The TSX is the second largest stock exchange in the world.
D)   Any corporation desiring to be listed on the TSX can do so.
E)   The TSX is an over-the-counter exchange functioning as both a primary and a secondary market.F) A) and D)
G) A) and E)

Question 16

Corporate social responsibility (CSR) is also referred to as the triple bottom line.

Accepted Answer

A) True 
 B)False

Question 17

A stakeholder is:

Accepted Answer

A)   Any person or entity that owns shares of stock of a corporation.
B)   Any person or entity that has voting rights based on stock ownership of a corporation.
C)   A person who initially started a ﬁrm and currently has management control over the cash ﬂows of the ﬁrm due to his/her current ownership of company stock.
D)   A creditor to whom the ﬁrm currently owes money and who consequently has a claim on the cash ﬂows of the ﬁrm.
E)   Any person or entity who potentially has a claim on the cash ﬂows of the ﬁrm.F) A) and B)
G) A) and C)

Question 18

In a limited partnership:

Accepted Answer

A)   Only the limited partners are involved in the daily management of the ﬁrm.
B)   Both general and limited partners are involved in the daily management of the ﬁrm.
C)   A limited partner is liable only for the amount he/she contributed to the partnership.
D)   A general partner is liable only for the amount he/she contributed to the partnership.
E)   The income earned is taxed like a corporation.F) C) and D)
G) None of the above

Question 19

Which of the following is a disadvantage of the corporate form of ownership?

Accepted Answer

A)   Limited liability.
B)   Ease of transfer of ownership.
C)   Taxation.
D)   Ability to raise capital.
E)   The life of the corporation.F) B) and E)
G) A) and E)

Question 20

What aspects of cash ﬂows is part of the ﬁnancial manager's responsibility?

Accepted Answer

The ﬁnancial manager is responsible for:...

Exam 1: Introduction to Corporate Finance

Which of the following is a disadvantage of the corporate form of ownership?

Correct Answer
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The triple bottom line measures:

Correct Answer
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Working capital management refers to:

Correct Answer
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A stakeholder is:

Correct Answer
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The secondary market is:

Correct Answer
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Capital structure determines the level of current assets that is required to maintain the ﬁrm's operational level.

Correct Answer
verified

Correct Answer
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The treasurer and the controller of a corporation generally report to the:

Correct Answer
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Corporate social responsibility (CSR) is also referred to as the triple bottom line.

Correct Answer
verified

The treasurer can be deﬁned as the person who is generally responsible for overseeing the _____ of a ﬁrm.

Correct Answer
verified

What aspects of cash ﬂows is part of the ﬁnancial manager's responsibility?

Correct Answer
verified
The ﬁnancial manager is responsible for:...
View Answer

The purchase and sale of shares between investors are done in which market?

Correct Answer
verified

Which one of the following statements is correct concerning the TSX?

Correct Answer
verified

A sole proprietorship is best deﬁned as a business owned by:

Correct Answer
verified

Ann is interested in purchasing Ted's factory. Since Ann is a poor negotiator, she hires Mary to negotiate the purchase price. Identify the parties to this transaction.

Correct Answer
verified

The corporate oﬃcer generally responsible for tasks related to tax management, cost accounting, ﬁnancial accounting, and data processing is the:

Correct Answer
verified

In a limited partnership:

Correct Answer
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A market where trading takes place directly between buyers and sellers is called a(n) :

Correct Answer
verified

Which one of the following best illustrates the agency problem?

Correct Answer
verified

The area of corporate ﬁnance concerned purchasing and selling stocks and bonds is called:

Correct Answer
verified

Exam 1: Introduction to Corporate Finance

Which of the following is a disadvantage of the corporate form of ownership?

Correct AnswerverifiedShow Answer

The triple bottom line measures:

Correct AnswerverifiedShow Answer

Working capital management refers to:

Correct AnswerverifiedShow Answer

A stakeholder is:

Correct AnswerverifiedShow Answer

The secondary market is:

Correct AnswerverifiedShow Answer

Capital structure determines the level of current assets that is required to maintain the ﬁrm's operational level.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The treasurer and the controller of a corporation generally report to the:

Correct AnswerverifiedShow Answer

Corporate social responsibility (CSR) is also referred to as the triple bottom line.

Correct AnswerverifiedShow Answer

The treasurer can be deﬁned as the person who is generally responsible for overseeing the _____ of a ﬁrm.

Correct AnswerverifiedShow Answer

What aspects of cash ﬂows is part of the ﬁnancial manager's responsibility?

Correct AnswerverifiedThe ﬁnancial manager is responsible for:...View AnswerShow Answer

The purchase and sale of shares between investors are done in which market?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct concerning the TSX?

Correct AnswerverifiedShow Answer

A sole proprietorship is best deﬁned as a business owned by:

Correct AnswerverifiedShow Answer

Ann is interested in purchasing Ted's factory. Since Ann is a poor negotiator, she hires Mary to negotiate the purchase price. Identify the parties to this transaction.

Correct AnswerverifiedShow Answer

The corporate oﬃcer generally responsible for tasks related to tax management, cost accounting, ﬁnancial accounting, and data processing is the:

Correct AnswerverifiedShow Answer

In a limited partnership:

Correct AnswerverifiedShow Answer

A market where trading takes place directly between buyers and sellers is called a(n) :

Correct AnswerverifiedShow Answer

Which one of the following best illustrates the agency problem?

Correct AnswerverifiedShow Answer

The area of corporate ﬁnance concerned purchasing and selling stocks and bonds is called:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The ﬁnancial manager is responsible for:...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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