Advanced Corporate Finance [Fn2] Examination
CGA-CANADA ADVANCED CORPORATE FINANCE [FN2] EXAMINATION June 2011 Marks
Notes:
1. Questions 1 and 2 are multiple choice. For these questions, select the best answer for each of the unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Except for multiple-choice questions, answers should include all supporting calculations where appropriate. If you provide alternative answers to Questions 3, 4, 5, or 6, only the first answer will be marked. If you wish to change your answer, you must cross out the answer you do not wish to submit for marking.
Time: 4 Hours
2. 3.
12
Question 1 Note:
2 marks each
a.
Which of the following is least likely to increase market efficiency? 1) Governments relax restrictions on foreign investment. 2) Corporations disseminate more information to investors. 3) More new investors choose to invest in individual stocks on their own rather than invest in mutual funds. 4) More stock transactions are conducted online than on the floor of an exchange.
b. Which of the following is the best example of ethical behaviour? 1) 2) 3) 4) c. ABC Corp. cut employees’ hours and pay without laying off anyone. Instead of depleting its retained earnings, DEF Inc. borrowed heavily to expand. JKL Ltd. used government bailout money to pay wages owed to its employees. Executives at MBI Corp. shared their performance bonus with new employees.
Which of the following represents one of the classes for cash inflows and outflows relevant to a capital budgeting decision? 1) 2) 3) 4) Terminal cash flows Sunk cost Undepreciated capital allowance Investment credit
d. Which of the following statements is true about the weighted average cost of
Notes:
1. Questions 1 and 2 are multiple choice. For these questions, select the best answer for each of the unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Except for multiple-choice questions, answers should include all supporting calculations where appropriate. If you provide alternative answers to Questions 3, 4, 5, or 6, only the first answer will be marked. If you wish to change your answer, you must cross out the answer you do not wish to submit for marking.
Time: 4 Hours
2. 3.
12
Question 1 Note:
2 marks each
a.
Which of the following is least likely to increase market efficiency? 1) Governments relax restrictions on foreign investment. 2) Corporations disseminate more information to investors. 3) More new investors choose to invest in individual stocks on their own rather than invest in mutual funds. 4) More stock transactions are conducted online than on the floor of an exchange.
b. Which of the following is the best example of ethical behaviour? 1) 2) 3) 4) c. ABC Corp. cut employees’ hours and pay without laying off anyone. Instead of depleting its retained earnings, DEF Inc. borrowed heavily to expand. JKL Ltd. used government bailout money to pay wages owed to its employees. Executives at MBI Corp. shared their performance bonus with new employees.
Which of the following represents one of the classes for cash inflows and outflows relevant to a capital budgeting decision? 1) 2) 3) 4) Terminal cash flows Sunk cost Undepreciated capital allowance Investment credit
d. Which of the following statements is true about the weighted average cost of