Personal Finance Canadian 6th Edition By Kapoor – Test Bank

11 KEY
1. (p. 330) Because Xerox is a ____________ corporation, an investor can purchase stock with the help of
an account executive through the secondary market.
A. private
B. public
C. general
D. institutional
E. securities
Dif iculty: Medium
Gradable: automatic
Kapoor ­ Chapter 11 #1
Learning Objective: 1
2. (p. 330) A corporation whose stock is owned by relatively few people and is not traded openly in stock
markets is called a(n) ____________ corporation.
A. private
B. public
C. equity
D. debt
E. preferred
Dif iculty: Easy
Gradable: automatic
Kapoor ­ Chapter 11 #2
Learning Objective: 1
3. (p. 330) Dividends are paid out of profits, and
A. dividends are guaranteed.
B. dividend payments must be approved by the firm’s board of directors.
C. dividends are paid before a firm’s taxes are paid.
D. dividends are usually paid twice a year.
E. dividends are guaranteed and paid twice a year.
Dif iculty: Hard
Gradable: automatic
Kapoor ­ Chapter 11 #3
Learning Objective: 1
4. (p. 330) Equity financing is a popular choice to provide long­term financing for a corporation because
A. a lender is always available to provide this type of financing.
B. it does not have to be repaid.
C. repayment doesn’t have to be made for ten years or more.
D. only interest must be paid for the first five years.
E. it does not cost anything to sell in the primary market.
Dif iculty: Medium
Gradable: automatic
Kapoor ­ Chapter 11 #4
Learning Objective: 1
5. (p. 330) PowerLight Corporation holds its annual meeting in April. Marie Stewart, who owns stock in the
company, cannot attend the meeting. She can vote by a:
A. voluntary certificate.
B. preemptive right.
C. participatory certificate.
D. cumulative certificate.
E. proxy.
Dif iculty: Medium
Gradable: automatic
Kapoor ­ Chapter 11 #5
Learning Objective: 1
6. (p. 331) The right of current stockholders to purchase any new stock that the corporation issues before it
is offered to the general public is called a ____________ right.
A. conversion
B. convertible
C. mandatory
D. preemptive
E. corporate
Dif iculty: Medium
Gradable: automatic
Kapoor ­ Chapter 11 #6
Learning Objective: 1
7. (p. 330­
331)
Which of the following statements is not true?
A. Corporations are required by law to have two stockholder meetings each year.
B. Stockholders must approve any amendment of the corporate charter.
C. Stockholders must approve the sale of certain corporate assets.
D. Corporations are required by law to distribute annual reports.
E. Stockholders may vote in person or by proxy.
Dif iculty: Medium
Gradable: automatic
Kapoor ­ Chapter 11 #7
Learning Objective: 1
8. (p. 331) Which of the following statements is not true?
A. Most board members like to keep stockholders happy.
B. Few things will unite stockholders into a powerful opposition force more rapidly than omitted or
lowered dividends.
C. Intelligent investors must be concerned about future after­tax profits.
D. If a cash dividend is declared by the board of directors, each stockholder by law receives an equal
amount per share.
E. Corporate dividends are always paid in cash.
Dif iculty: Hard
Gradable: automatic
Kapoor ­ Chapter 11 #8
Learning Objective: 1
9. (p. 331) Dividends remain with the stock until
A. five days after the date of record.
B. two business days after the date of record.
C. five days before the date of record.
D. two business days before the date of record.
E. five days before the actual payment date.
Dif iculty: Hard
Gradable: automatic
Kapoor ­ Chapter 11 #9
Learning Objective: 1
10. (p. 331) Kate Babini owns 250 shares of Gildan Activewear. Suppose that for the last calendar quarter,
Gildan paid $0.28 a share. What is the total amount she received in her dividend cheque for this
quarter?
A. $0.28
B. $2.80
C. $70.00
D. $250.00
E. $892.00
Dif iculty: Easy
Gradable: automatic
Kapoor ­ Chapter 11 #10
Learning Objective: 1