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class 6-Ch6.rtf

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School
Department
Business
Course
BUSI 4410U
Professor
Karl Pinno
Semester
Fall

Description
Ch6 Student: ___________________________________________________________________________ 1. Which of the following best describes a "leveraged buyout". A. The use of borrowed funds to take a company private. B. Buying a majority share in a small, relatively risky company. C. The private debt-financing of company with a known history. D. The purchase of "on going concerns" that is family owned and operated. E. Debt financing of a start-up firm with no assets to provide as collateral. 2. To be listed on the Toronto Stock Exchange, a firm must have: A. Net tangible assets more than $2 million B. Pre-tax income larger than $200,000 in most recent years C. At least $4 million in market value of publicly held shares D. At least 1 million shares of outstanding stock held in public hands E. All of the above 3. Suppose all stocks in a price-weighted index increase by the same percentage one day. The stock that would affect the index the most would be the: A. lowest priced stock. B. highest priced stock. C. smallest capitalization stock. D. largest capitalization stock. E. All of the stocks would change the index by the same amount. 4. Which of the following would not be a reason to adjust the divisor of a price-weighted index? A. A stock in the index splits. B. A cash dividend is paid. C. A stock is dropped from the index and a new stock added. D. A stock in the index has a reverse stock split. E. All of the above are reasons to adjust the divisor. 5. Most stock indexes A. Have a constant divisor that is equal to the number of securities in the index B. Are based on the 300 largest Canadian companies C. Reflect both dividends and capital gains D. Are based on 100 stocks E. Are based on capital gains only 6. If Purple, Indigo, and Violet are the only three stocks in the index, what is the price-weighted index return? A. 3.53% B. 4.03% C. 5.87% D. 7.11% E. 6.49% 7. If Purple, Indigo, and Violet are the only three stocks in the index, what is the value-weighted index return? A. 3.53% B. 4.03% C. 5.87% D. 7.11% E. 6.49% 8. If Purple, Indigo, and Violet are the only three stocks in the index, what is the equally-weighted index return? A. 3.53% B. 4.03% C. 5.87% D. 7.11% E. 6.49% 9. Purple, Indigo and Violet are the only stocks in an index. You want the beginning index value to be 500. What is the ending index value for the price-weighted index? A. 535.53 B. 528.10 C. 518.26 D. 530.47 E. 466.82 10. Yesterday, the DJIA closed at 12,051.96. The divisor is 0.13402801. Today, every one of the stock in the index increase in value by $0.50 a share. What is today's DJIA index? A. 12,018.43 B. 12,128.10 C. 12,609.26 D. 12,163.88 E. 12,612.00 Ch6 Key 1. Which of the following best describes a "leveraged buyout". A. The use of borrowed funds to take a company private. B. Buying a majority share in a small, relatively risky company. C. The private debt-financing of company with a known history. D. The purchase of "on going concerns" that is family owned and operated. E. Debt financing of a start-up firm with no assets to provide as collateral. Jordan - Chapter 06 #4 Level: Easy Section: 6.1-Private Equity versus Selling Securities to the Public Topic: Leveraged Buyout 2. To be listed on the Toronto Stock Exchange, a firm must have: A. Net tangible assets more than $2 million B. Pre-tax income larger than $200,000 in most recent years C. At least $4 million in market value of publicly held shares D. At least 1 million shares of outstanding stock held in public hands E. All of the above Jordan - Chapter 06 #62 Level: Hard Section: 6.3-The Toronto Stock Exchange and the TSX Venture Exchange Topic: TSX Listing 3. Suppose all stocks in a price-weighted index increase by the same percentage one day. The stock that would affect the index the most would be the: A. lowest priced stock. B. highest priced stock. C. smallest capitalization stock. D. largest capitalization stock. E. All of the stocks would change the index by the same amount. Jordan - Chapter 06 #56 Level: Hard Section: 6.5-Stock Market Information Topic: Price-Weighted Index 4. Which of the following would not be a reason to adjust the divisor of a price-weighted index? A. A stock in the index splits. B. A cash dividend is paid. C. A stock is dropped from the in
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