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Management and Organizational Studies
Management and Organizational Studies 2310A/B
Bruce Morrison

MOS 2310A FinancePractice Questions MidtermALL Sections Instructor Danny L Morrison MBA CPA CMA Multiplechoice 25 marks x 401 Which of the following statements best describes firm organization a It is generally more expensive to form a proprietorship than a corporation because with a proprietorship extensive legal documents are required b One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation at both the firm level and the owner level c One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership d If a regular partnership goes bankrupt each partner is exposed to liabilities only up to the amount of his or her investment in the business2 You recently sold 100 shares of your new company XYZ Corporation to your brother at a family reunion At the reunion your brother gave you a cheque for the shares and you gave your brother the share certificates Which of the following statements best describes this transaction a This is an example of an exchange of physical assets b This is an example of a primary market transaction c This is an example of a direct transfer of capital d This is an example of a money market transaction3 One drawback of switching from a partnership to the corporate form of organization is the following a It subjects the firm to additional regulations b It makes it more difficult for the firm to raise additional capital c It makes the firms investors subject to greater potential personal liabilities d It makes it more difficult for the firms investors to transfer their ownership interests4 Which of the following statements is most accurate in regarding corporations a Due to limited liability unlimited lives and ease of ownership transfer the vast majority of businesses are organized as corporations b Due to legal considerations related to ownership transfers and limited liability most business is conducted by corporations in spite of large corporations often less favourable tax treatment c Large corporations are taxed more favourably than sole proprietorships d Corporate stockholders are exposed to unlimited liability 1 5 Which of the following investments will have the HIGHEST FUTURE VALUE at the end of 10 years Assume that the effective annual rate for all investments is the same a Investment A pays 250 at the beginning of every year for the next 10 years a total of 10 payments b Investment B pays 125 at the end of every 6month period for the next 10 years a total of 20 payments c Investment C pays 125 at the beginning of every 6month period for the next 10 years a total of 20 payments d Investment D pays 2500 at the end of 10 years a total of one payment6 Suppose you have 1500 and plan to purchase a 5year certificate of deposit CD that pays 35 interest compounded annually How much will you have when the CD matures a 178153 b 187061 c 196414 d 2062347 Last year Toto Corporations sales were 225 million If sales grow at 6 per year how large in millions will they be 5 years later a 27174 b 28605 c 30110 d 316168Suppose a Government of Canada bond promises to pay 1000 five years from now If the going interest rate on 5year government bonds is 55 how much is the bond worth today a 76513 b 80339 c 84356 d 885749 A bond that is issued by a Korean company in Canada that is denominated in Canadian dollars is an example of which of the following a a domestic bond b a global bond c a foreign bond d a euro bond10 Under normal conditions which of the following would be most likely to increase the coupon rate required to enable a bond to be issued at par a adding additional restrictive covenants that limit managements actions b adding a call provision c the rating agencies change the bonds rating from Baa to Aaa d adding a sinking fund2
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