Question 1

Return and risk are the key determinants in share price. Increased return results in_________ , other things remaining the same.

Accepted Answer

A)  an unchanged share price 
B)  a lower share price 
C)  a higher share price 
D)  an undetermined share price

Question 2

When entering into a partnership with a business associate, it is strongly recommended that

Accepted Answer

A)  a partnership agreement be drafted outlining roles, responsibilities, and profit sharing. 
B)  both partners contribute an equal amount of money. 
C)  both partners contribute an equal amount of money and labor. 
D)  both partners contribute an equal amount of labor.

Question 3

Some of Canada's largest corporations include Nortel Networks, Bombardier, and the Royal Bank.

Accepted Answer

A) True 
 B)False

Question 4

In a limited partnership, the liability protection does not protect partners from their individual actsof malpractice.

Accepted Answer

A) True 
 B)False

Question 5

In a partnership, owners have unlimited liability and may have to cover debts of other less financially sound partners.

Accepted Answer

A) True 
 B)False

Question 6

Managerial finance

Accepted Answer

A)  recognizes funds on an accrual basis. 
B)  involves the design and delivery of advice and financial products. 
C)  devotes the majority of its attention to the collection and presentation of financial data. 
D)  involves tasks such as budgeting, financial forecasting, cash management, and funds procurement.

Question 7

The responsibility for managing day-to-day operations and carrying out corporate policies belongsto the

Accepted Answer

A)  creditors. 
B)  chief executive officer. 
C)  stockholders. 
D)  board of directors.

Question 8

Which of the following legal forms of organization is characterized by limited liability?

Accepted Answer

A)  professional partnership 
B)  partnership 
C)  corporation 
D)  sole proprietorship

Question 9

Generally, the Treasurer of a large corporation reports to the

Accepted Answer

A)  Chief Executive Officer. 
B)  General Manager. 
C)  Credit Manager. 
D)  Chief Financial Officer.

Question 10

The financial manager is interested in the cash inflows and outflows of the firm, rather than the accounting data, in order to ensure

Accepted Answer

A)  the ability to acquire new assets. 
B)  profitability. 
C)  the ability to pay dividends. 
D)  solvency.

Question 11

Managerial finance

Accepted Answer

A)  involves tasks such as budgeting, financial forecasting, cash management, and funds procurement. 
B)  devotes the majority of its attention to the collection and presentation of financial data. 
C)  recognizes funds on an accrual basis. 
D)  involves the design and delivery of advice and financial products.

Question 12

Which of the following is a career opportunity in managerial finance?

Accepted Answer

A)  Capital Expenditures Management 
B)  Investment 
C)  Personal Financial Planning 
D)  Real Estate and Insurance

Question 13

Agents of corporate owners are themselves owners of the firm and have been elected by all the corporate owners to represent them in decision-making and management of the firm.

Accepted Answer

A) True 
 B)False

Question 14

Financial analysts study_________while accountants prepare financial statements using_________accounting techniques.

Accepted Answer

A)  accrual; forecasted 
B)  cash flows; forecasted 
C)  accrual; cash flows 
D)  cash flows; accrual

Question 15

A "legal entity" which can sue and be sued, make and be party to contracts, and acquire property in its own name is

Accepted Answer

A)  a professional partnership. 
B)  a corporation. 
C)  a partnership. 
D)  a sole proprietorship.

Question 16

The difference between the cost of funds used to finance an investment and its after-tax operatingprofits is called

Accepted Answer

A)  economic value added. 
B)  earnings per share. 
C)  retained earnings. 
D)  a dividend.

Question 17

Sig Hansen runs a ski resort in British Columbia. He is considering replacing the ski lifts at the resort. His calculations suggest that if he does, the economic benefits from the upgraded ski-lift operations will total $959,000 over the next six years. The ski lifts he already has are projected to generate $444,000 in economic benefits over the next six years. The new ski lifts would require an initial cash investment of $385,000 and Sig estimates he can sell his existing ski lift equipment for$170,000. Based on these estimates, what is Sig's marginal cost from replacing the ski lifts?

Accepted Answer

A)  $385,000 
B)  $515,000 
C)  $574,000 
D)  $215,000

Question 18

A financial analyst is responsible for maintaining and controlling the firm's daily cash balances. Heor she frequently manages the firm's short-term investments and coordinates short-term borrowing and banking relationships.

Accepted Answer

A) True 
 B)False

Question 19

In large companies, the project finance manager is responsible for coordinating the assets and liabilities of the employees' pension fund.

Accepted Answer

A) True 
 B)False

Question 20

As a sole proprietor, you are responsible for

Accepted Answer

A)  marketing the business to the target market. 
B)  maintaining financial records and reporting to the government. 
C)  the day-to-day management of the business including customer service. 
D)  all of the above.

Exam 1: Overview of Corporate Finance

Return and risk are the key determinants in share price. Increased return results in_________ , other things remaining the same.

When entering into a partnership with a business associate, it is strongly recommended that

Some of Canada's largest corporations include Nortel Networks, Bombardier, and the Royal Bank.

In a limited partnership, the liability protection does not protect partners from their individual actsof malpractice.

In a partnership, owners have unlimited liability and may have to cover debts of other less financially sound partners.

Managerial finance

The responsibility for managing day-to-day operations and carrying out corporate policies belongsto the

Which of the following legal forms of organization is characterized by limited liability?

Generally, the Treasurer of a large corporation reports to the

The financial manager is interested in the cash inflows and outflows of the firm, rather than the accounting data, in order to ensure

Managerial finance

Which of the following is a career opportunity in managerial finance?

Agents of corporate owners are themselves owners of the firm and have been elected by all the corporate owners to represent them in decision-making and management of the firm.

Financial analysts study_while accountants prepare financial statements using_accounting techniques.

A "legal entity" which can sue and be sued, make and be party to contracts, and acquire property in its own name is

The difference between the cost of funds used to finance an investment and its after-tax operatingprofits is called

A financial analyst is responsible for maintaining and controlling the firm's daily cash balances. Heor she frequently manages the firm's short-term investments and coordinates short-term borrowing and banking relationships.

In large companies, the project finance manager is responsible for coordinating the assets and liabilities of the employees' pension fund.

As a sole proprietor, you are responsible for