Introduction to Corporate Finance 5th Canadian Edition by Laurence Booth test bank
c) derivatives.
d) T-bills.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
23. Financial markets are usually classified by the type and maturity of the financial assets traded. The two main classifications are as follows:
a) bond market and money market.
b) money market and capital market.
c) bond market and foreign-exchange market.
d) commodity market and capital market.
Answer: b
Type: Definition
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
24. Of the following list, who are the dominant players in the money market?
I. individuals
II. corporations
III. governments
a) I and II
b) I and III
c) II and III
d) I, II, and III
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
25. All common shares are comprised of which two components?
a) ownership and voting rights
b) ownership and dividend rights
c) voting and dividend rights
d) dividend and yield rights
Answer: a
Type: Concept
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
26. Though they are classified as equity, why are preferred shares also similar to debt?
a) Both carry the same interest rate.
b) Dividends on preferred shares must be paid out before any common share dividends.
c) The voting structures for preferred shares and debt are equivalent.
d) Preferred shares have similar maturity structures to debt.
Answer: b
Type: Concept
Difficulty: Difficult
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
27. Which of the following is NOT a component of debt securities?
a) maturity
b) repayment
c) dividends
d) interest payments
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
28. An example of a non-marketable financial asset is a
a) demand deposit.
b) T-bill.
c) commercial paper.
d) common share.
Answer: a
Type: Definition
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
29. How do governments obtain the majority of their short- and long-term financing?
a) T-bills and Canada Savings Bonds
b) T-bills, traditional bonds, and Canada Savings Bonds
c) T-bills, equity, and traditional bonds
d) traditional bonds and Canada Savings Bonds
Answer: b
Type: Concept
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
30. Which of the following is NOT an example of a capital market security?
a) bond
b) debenture
c) common equity
d) T-bill
Answer: d
Type: Definition
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.