Introduction to Corporate Finance 5th Canadian Edition by Laurence Booth test bank
d) bankruptcy of one of the leading financial institutions
Answer: c
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
39. Who are the biggest borrowers and lenders in Canada, respectively?
a) government and households
b) government and banks
c) banks and mutual funds
d) Crown corporations and banks
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
40. Why can’t the Canadian government issue equity?
a) because assets belong to all Canadians
b) it is not listed in the financial markets
c) it has too much debt
d) because expenditures exceed revenues
Answer: a
Type: Concept
Difficulty: Medium
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
41. If the stock of a listed firm decreases by 50 percent, what does it mean to the shareholders?
a) Their ownership of the firm will decrease by 50 percent.
b) Total value of their holdings decreases by 50 percent.
c) The debt of the firm decreases by 50 percent.
d) nothing
Answer: b
Type: Concept
Difficulty: Medium
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
42. The consolidation of U.S. and global stock markets has
a) been increasing recently, as shown by the merger of the NYSE and Euronext.
b) been decreasing recently, as shown by the decrease in multi-listed stocks.
c) led to lower risk in investments because markets have become less interdependent.
d) led to increased reliance on human interactions in securities trading.
Answer: a
Type: Concept
Difficulty: Medium
Learning Objective: Explain the importance of the global financial system and how Canada is impacted by global events such as the recent U.S. financial crisis.
Section Reference: The Global Financial Community
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
43. The two sectors that are normally regarded as the lowest risk in the financial market are
a) T-bills and loans extended to “PIIGS” countries.
b) demand deposits and loans to countries that have taken austerity measures.
c) household mortgages and government debt.
d) government debt and foreign company borrowings.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: Explain the importance of the global financial system and how Canada is impacted by global events such as the recent U.S. financial crisis.
Section Reference: The Global Financial Community
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
44. Which of the following is NOT a benefit of global financial markets?
a) They represent important sources of funds for borrowers.
b) They provide diversification benefits to Canadian investors.
c) Canadian companies can list their shares in different markets.
d) The value of Canadian shares becomes more stable.
Answer: d
Type: Concept
Difficulty: Easy
Learning Objective: Explain the importance of the global financial system and how Canada is impacted by global events such as the recent U.S. financial crisis.
Section Reference: The Global Financial Community
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
45. Which is the world’s largest and most famous stock market?
a) New York Stock Exchange (NYSE)
b) Toronto Stock Exchange (TSX)
c) Tokyo Stock Exchange (TSE)
d) London Stock Exchange (LSE)
Answer: a
Type: Definition
Difficulty: Easy
Learning Objective: Explain the importance of the global financial system and how Canada is impacted by global events such as the recent U.S. financial crisis.