Test Bank For Fundamentals Of Corporate Finance, 8th Canadian Edition

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01Student: ___________________________________________________________________________1.When evaluating a project in which a firm might invest, the size but not the timing of the cash flows isimportant.TrueFalse2.In capital budgeting, the financial manager tries to identify investment opportunities that are worth moreto the firm than they cost to acquire.TrueFalse3.Maximization of the current earnings of the firm is the main goal of the financial manager.TrueFalse4.The primary goal of a financial manager should be to maximize the value of shares issued to newinvestors in the corporation.TrueFalse5.The primary goal of financial management is to minimize the corporate tax liability.TrueFalse6.When owners are managers (such as in a sole proprietorship), a firm will have agency costs.TrueFalse7.IBEC Inc. of Toronto spends approximately $2 million annually to hire auditors to go over the firm'sfinancial statements. This is an example of an indirect agency cost.TrueFalse8.The board of directors has the power to act on behalf of the shareholders to hire and fire the operatingmanagement of the firm. In a legal sense, the directors are "principals" and the shareholdersare "agents".TrueFalse9.The corporate officer generally responsible for tasks related to tax management, cost accounting,financial accounting, and data processing is the:A. Corporate Treasurer.B. Director.C. Corporate Controller.D. Chairman of the Board.E. Vice President of Operations.10. The corporate officer generally responsible for tasks related to cash and credit management, financialplanning, and capital expenditures is the:A. Corporate Treasurer.B. Director.C. Corporate Controller.D. Chairman of the Board.E. Vice President of Operations.11. The process of planning and managing a firm's Long-term investments is called:A. Working capital management.B. Financial depreciation.C. Agency cost analysis.D. Capital budgeting.E. Capital structure.

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12. The mixture of debt and equity used by the firm to finance its operations is called:A. Working capital management.B. Financial depreciation.C. Agency cost analysis.D. Capital budgeting.E. Capital structure.13. The management of the firm's short-term assets and liabilities is called:A. Working capital management.B. Financial depreciation.C. Agency cost analysis.D. Capital budgeting.E. Capital structure.14. A business owned by a single individual is called a(n):A. Corporation.B. Sole proprietorship.C. Partnership.D. Closed receivership.E. Open structure.15. A business formed by two or more individuals or entities is called a(n):A. Corporation.B. Sole proprietorship.C. Partnership.D. Closed receivership.E. Open structure.16. The division of profits and losses between the members of a partnership is formalized in the:A. Indemnity clause.B. Indenture contract.C. Statement of purpose.D. Partnership agreement.E. Group charter.17. A business created as a distinct legal entity composed of one or more individuals or entities is calleda(n):A. Corporation.B. Sole proprietorship.C. Partnership.D. Closed receivership.E. Open structure.18. The document that legally establishes domicile for a corporation is called the:A. Indenture contract.B. Partnership agreement.C. Amended homestead filing.D. Bylaws.E. Articles of incorporation.19. The rules by which corporations govern themselves are called:A. Indenture provisions.B. Indemnity provisions.C. Partnership agreements.D. Bylaws.E. Articles of incorporation.

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20. The primary goal of financial management is to:A. Maximize current sales.B. Maximize the current value per share of the existing stock.C. Avoid financial distress.D. Minimize operational costs.E. Maintain steady earnings growth.21. The possibility of conflict of interest between the stockholders and management of the firm is called:A. The shareholders' conundrum.B. Corporate breakdown.C. The agency problem.D. Corporate activism.E. Legal liability.22. Agency costs are:A. The total dividends paid to shareholders over the lifetime of the firm.B. The costs that result from default and bankruptcy of the firm.C. Corporate income subject to double taxation.D. The costs of the conflict of interest between stockholders and management.E. The total interest paid to creditors over the lifetime of the firm.23. A stakeholder is:A. Given to each stockholder when they first purchase their stock.B. A proxy vote made at a shareholders' meeting.C. A founding stockholder of the firm.D. An original creditor of the firm.E. A person or entity including a stockholder or creditor, who potentially has a claim on the cash flows ofthe firm.24. The original sale of securities by governments and corporations occurs in the:A. Primary market.B. Secondary market.C. Dealer market.D. Auction market.E. Liquidation market.25. The purchase and sale of securities after the original issuance occurs in the:A. Primary market.B. Secondary market.C. Dealer market.D. Auction market.E. Liquidation market.26. A market where dealers buy and sell securities for themselves, at their own risk, is called a(n):A. Primary market.B. Secondary market.C. Dealer market.D. Auction market.E. Liquidation market.27. A market where trading takes place between buyers and sellers directly is called a(n):A. Primary market.B. Secondary market.C. Dealer market.D. Auction market.E. Liquidation market.

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28. The secondary market is:A. The market for the original sale of securities by governments and corporations.B. The market in which dealers buy and sell for themselves, at their own risk.C. The market in which purchasers are matched with those who wish to sell.D. A market which has no central Location.E. The market in which securities are bought and sold after original sale.29. The Corporate Treasurer is in charge of:A. Cost accounting.B. Credit management.C. Data processing.D. Tax management.E. Financial accounting.30. The Chief Financial Officer of a corporation is the:A. Chairman of the Board.B. President.C. Corporate Controller.D. Vice President of Finance.E. Corporate Treasurer.31. Deciding whether or not to open a new store is part of the process known as:A. Capital budgeting.B. Credit management.C. Capital structure.D. Cash management.E. Working capital management.32. Capital structure refers to:A. The amount of inventory held.B. The amount of cash on hand.C. The mixture of debt and equity.D. The accounts receivable policy.E. The management of Long-term investments.33. Working capital management refers to:A. The types of stock issued.B. The amount of Long-term debt.C. The mixture of debt and equity.D. The types of Long-term investments made.E. The levels of cash and inventory held.34. A business that is a distinct legal entity is a:A. Proprietorship.B. Partnership with only two partners.C. Limited partnership.D. General partnership.E. Corporation.35. The primary goal of financial management is to maximize the:A. Growth rate of a firm.B. Compensation of the corporate officers.C. Current value of each share of outstanding stock.D. Number of shares of common stock outstanding.E. Book value of the firm.

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36. A proxy fight is:A. A method used by stockholders to replace corporate management.B. A means used to decrease the number of outstanding shares of stock.C. A normal part of a corporate merger.D. Used as a means of increasing the amount of dividends paid per share.E. Used as a means of issuing additional shares of common stock.37. Suppliers, customers, and employees of a corporation are called:A. Shareholders.B. Stakeholders.C. Debtors.D. Stockholders.E. Partners.38. A proprietorship is:A. A business formed by two or more individuals.B. A separate legal body formed by an individual who has limited personal liability.C. A business owned by an individual who has unlimited personal liability.D. A business managed by a single general partner.E. A limited liability form of business ownership.39. Conflicts that arise between the interests of managers and stockholders are referred to as:A. Control problems.B. Agency problems.C. Management conflicts.D. Stockholder conflicts.E. Proxy fights.40. The primary market includes:A. The purchase and sale of shares of stock between two shareholders.B. The sale of stock by a shareholder in the open market.C. The sale of stock by a shareholder in an auction market.D. The sale of new securities by a corporation on an exchange.E. The sale of stock by a shareholder in the OTC market.41. Stocks that trade on an exchange are referred to as:A. Primary stocks.B. Optioned stocks.C. SEC stocks.D. Privately held stocks.E. Listed stocks.42. An individual who buys and sells stocks for his/her own account is a:A. Dealer.B. Agent.C. Broker.D. Auctioneer.E. OTC broker.43. Tasks related to tax management, cost accounting, financial accounting, and data processing are theresponsibility of which corporate officer?A. The Corporate Treasurer.B. The Board of Directors.C. The Corporate Controller.D. The Chairman of the Board.E. The Vice President of Production.

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44. The controller can be defined as the person who is generally responsible for overseeing the _____ of afirm.A. Cash balances.B. Capital expenditures.C. Production functions.D. Accounting functions.E. Financial planning.45. The treasurer can be defined as the person who is generally responsible for overseeing the _____ of afirm.A. Tax matters.B. Data processing functions.C. Financial accounting.D. Cost accounting.E. Financial planning.46. Capital budgeting is defined as the:A. Mix of debt and equity used by a firm to finance its operations.B. Management of a firm's long-term investments.C. Process of determining the optimal types and amounts of inventory to keep on hand.D. Determination of the total amount of money which a firm should borrow.E. management of a firm's net working capital.47. A firm's capital structure is defined:A. As the combination of debt and equity used to finance the firm's operations.B. By the types of fixed assets the firm owns.C. As the mix of short-term and Long-term assets owned by the firm.D. As the amount of fixed assets needed to support every $1 in sales.E. By the nature of the product or service provided.48. Working capital management refers specifically to:A. Obtaining the necessary funds to finance a firm's daily activities.B. The daily use of a firm's fixed assets to generate revenue.C. The oversight of a firm's current accounts.D. The management of a firm's Loan accounts from financial institutions.E. The utilization of a firm's assets on a daily basis.49. A sole proprietorship is best defined as a business owned by:A. A single individual who has limited liability for the firm's debts.B. A single individual who has unlimited liability for the firm's debts.C. Individuals who enjoy limited liability.D. One or more individuals who have agreed to accept unlimited liability for the firm.E. An individual for less than ten years.50. A general partnership is best defined as a business owned by:A. A single individual who desires limited liability for the firm's debts.B. One or more individuals who are each totally responsible for the debts of the entity.C. Multiple individuals, 80 percent of whom enjoy limited liability.D. Two or more individuals, each of whom has limited liability for the firm's debts.E. Two or more individuals, only one of whom has unlimited liability for the firm's debts.51. An entity wherein one or more owners may elect to actively manage the firm while other owners chooselimited liability instead of management responsibility is called a:A. Corporation.B. General partnership.C. Limited liability corporation.D. Limited liability company.E. Limited partnership.

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52. Bylaws are:A. The terms by which partnership profits are distributed.B. The rules by which corporations govern themselves.C. The agreements specifying which partners are general partners and which are limited partners.D. The documents which set forth the business purpose of a firm.E. The documents which specify how tax liabilities will be allocated among the owners.53. The agency problem is best defined as a conflict of interest between a firm's:A. Various employees.B. Various managers.C. Managers and the firm's employees.D. Stockholders and the firm's managers.E. Stockholders and the firm's debtors.54. The primary goal of financial management is defined as the:A. Maximization of the current value per share of the outstanding stock.B. Maximization of the current profits per share of the firm.C. Minimization of the risks associated with company ownership.D. Maintenance of a steady stream of dividends to the existing shareholders.E. Minimization of the outstanding debt owed by the firm to third parties.55. An agency problem is said to exist when there is a conflict of interest between _____ and _____.A. An agent; his or her representativeB. A broker; a dealerC. A principal; his or her agentD. One shareholder; another shareholderE. A shareholder; a stakeholder56. The primary market is defined as the market:A. Wherein the original sale of securities by the issuer to the general public occurs.B. Where stocks and bonds are exchanged between dealers.C. Mechanism by which a sale of a financial instrument between two shareholders is conducted.D. Operated by brokers for the benefit of shareholders.E. Commonly known as the over-the-counter market.57. The secondary market is the market wherein:A. One issuer exchanges securities directly with another issuer.B. The government is either the buyer or the seller of the security.C. Shareholders buy from and sell to other shareholders.D. The security issuer is the seller and the buyer is a member of the general public.E. The security issuer is the buyer and the seller is a member of the general public.58. A dealer is a person who:A. Conducts a trade on behalf of another individual.B. Buys and sells but does not own the commodity being bought or sold.C. Buys and sells on behalf of the original issuer of the commodity being bought or sold.D. Buys and sells for themselves, at their own risk.E. Buys and sells strictly on the trading floor of an exchange.59. The person generally directly responsible for overseeing the tax management, cost accounting, financialaccounting, and data processing functions is the:A. Treasurer.B. Director.C. Controller.D. Chairman of the board.E. Chief executive officer.

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60. The person generally directly responsible for overseeing the cash and credit functions, financial planning,and capital expenditures is the:A. Treasurer.B. Director.C. Controller.D. Chairman of the board.E. Chief operations officer.61. The process of planning and managing a firm's long-term investments is called:A. Working capital management.B. Financial depreciation.C. Agency cost analysis.D. Capital budgeting.E. Capital structure.62. The mixture of debt and equity used by a firm to finance its operations is called:A. Working capital management.B. Financial depreciation.C. Cost analysis.D. Capital budgeting.E. Capital structure.63. The management of a firm's short-term assets and liabilities is called:A. Working capital management.B. Debt management.C. Equity management.D. Capital budgeting.E. Capital structure.64. Which one of the following correctly defines the chain of command in a typical corporate organizationalstructure?A. The vice president of finance reports to the chairman of the board.B. The chief executive officer reports to the board of directors.C. The controller reports to the president.D. The treasurer reports to the chief executive officer.E. The chief operations officer reports to the vice president of production.65. A business formed by two or more individuals who each have unlimited liability for business debts iscalled a:A. Corporation.B. Sole proprietorship.C. General partnership.D. Limited partnership.E. Limited liability company.66. The division of profits and losses among the members of a partnership is formalized in the:A. Indemnity clause.B. Indenture contract.C. Statement of purpose.D. Partnership agreement.E. Group charter.67. A business created as a distinct legal entity composed of one or more individuals or entities is calleda:A. Corporation.B. Sole proprietorship.C. General partnership.D. Limited partnership.E. Unlimited liability company.

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68. The corporate document that sets forth the business purpose of a firm is the:A. Indenture contract.B. Provincial tax agreement.C. Corporate bylaws.D. Corporate charter.E. Articles of incorporation.69. Capital structure decisions include which of the following?A. Determining the number of shares of stock to issueB. Determining whether the firm should purchase or lease some equipmentC. Allocating funds to the various divisions within the firmD. Evaluating the size of inventory to be kept on handE. Evaluating the customer credit policy70. The decision to issue debt rather than additional shares of stock is an example of:A. Working capital management.B. A net working capital decision.C. Capital budgeting.D. A controller's duties.E. The capital structure decision71. A conflict of interest between the stockholders and management of a firm is called:A. Stockholders' liability.B. Corporate breakdown.C. The agency problem.D. Corporate activism.E. Legal liability.72. A stakeholder is:A. Any person or entity that owns shares of stock of a corporation.B. Any person or entity that has voting rights based on stock ownership of a corporation.C.A person who initially started a firm and currently has management control over the cash flows of thefirm due to his/her current ownership of company stock.D. A creditor to whom the firm currently owes money and who consequently has a claim on the cashflows of the firm.E. Any person or entity who potentially has a claim on the cash flows of the firm.73. The original sale of securities by governments and corporations to the general public occurs in the:A. Primary market.B. Secondary market.C. Private placement market.D. Proprietary market.E. Liquidation market.74. When one shareholder sells stock directly to another the transaction is said to occur in the:A. Dealer market.B. Primary market.C. Secondary market.D. OTC market.E. TSX market.75. A market where dealers buy and sell securities for themselves, at their own risk, is called a(n):A. Primary market.B. Secondary market.C. Dealer market.D. Auction market.E. Liquidation market.

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76. A market where trading takes place directly between buyers and sellers is called a(n):A. primary market.B. OTC market.C. Dealer market.D. Auction market.E. Liquidation market.77. This of the following is an answer to "What are the duties of a financial manager?"I. Deciding how much interest to pay the holders of the corporation's bonds.II. Deciding the mix of long-term debt and equity.III. Deciding which projects a firm should undertake.IV. Deciding how much short-term debt to use.A. I and II onlyB. I, II, and III onlyC. II and III onlyD. II, III, and IV onlyE. I, II, III, and IV78. A financial manager is responsible for deciding whether or not new manufacturing equipment should bepurchased to replace existing equipment. The new equipment would reduce labour expenses and wouldallow the firm to reduce its investment in inventory. Which of the financial management areas would beinvolved in the decision process?I. Capital budgeting.II. Capital structure management.III. Working capital management.A. I onlyB. I and II onlyC. II and III onlyD. I and III onlyE. I, II, and III79. According to the statement of financial position model of the firm, corporate finance may be thought ofas the analysis of three primary subject areas. Which of the following correctly lists these areas?A. Capital structure, capital budgeting, security analysis.B. Capital budgeting, capital structure, capital spending.C. Capital budgeting, capital structure, net working capital.D. Capital structure, net working capital, capital rationing.E. Capital budgeting, capital spending, net working capital.80. Which of the following is NOT considered one of the basic questions of corporate finance?A. What long-term investments should the firm choose?B. At what rate of interest should a firm borrow?C. Where will the firm get the long-term financing to pay for its investments?D. What mixture of debt and equity should the firm use to fund its operations?E. How should the firm manage its working capital, i.e., its everyday financial activities?81. In the evaluation of cash flow in a capital budgeting decision, which of the following must be considered?I. The size of the cash flow.II. The timing of the cash flow.III. The risk of the cash flow.A. I onlyB. I and II onlyC. II onlyD. II and III onlyE. I, II, III

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82. Which of the following combinations of attributes would make a capital expenditure project desirable to afinancial manager?I. The project is worth more to the firm than the cost to acquire it.II. The value of the cash flow generated by the project exceeds the project's cost.III. The project's cash flows have acceptable levels of risk and size, but not timing.A. I onlyB. I and II onlyC. I and III onlyD. II and III onlyE. I, II, and III83. The term capital structure describes:A. The mixture of debt and equity a firm uses to finance its operations.B. The mixture of long-term investments a firm has made.C. The mix of preferred stock and common stock that makes up the equity account of a firm.D. The firm's short-term assets and short-term liabilities.E. The mixture of short-term liabilities a firm uses to finance its short-term assets.84. A financial manager is responsible for determining the firm's appropriate level of inventory. Which of thefinancial management areas addresses this decision?I. Capital budgeting.II. Capital structure management.III. Working capital management.A. I onlyB. II onlyC. III onlyD. I and II onlyE. I, II, and III85. Which of the following statements is/are false concerning partnerships?I. Limited partners are responsible for all debts of the partnership.II. Limited partners generally do not manage the partnership.III. In a limited partnership, all partners share equally in the gains or losses.A. I onlyB. II onlyC. I and II onlyD. I and III onlyE. I, II, and III86. Which of the following is an advantage of ownership of a corporation compared to that of a soleproprietorship?A. The owners of the corporation have unlimited liability for the firm's debts.B. It is the simplest to start.C. The corporation has an unlimited life.D. Dividends received by the corporation's shareholders are tax-exempt.E. It is more difficult to transfer ownership in a corporation.87. Which of the following is a true statement concerning corporations?A. The equity that can be raised by the corporation is limited to the current shareholders' personal wealth.B. The life of the corporation is unlimited.C. The corporation has limited liability for business debts.D. When dividends are paid, corporate profits are taxed once.E. It is difficult to transfer ownership of corporate shares.

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88. Sue Folker wants to start a new business decommissioning nuclear warheads and reactors. The work willinvolve significant hazards, and Sue is concerned about protecting her personal wealth from any lossesthe business might incur. If she is to be the majority owner of the business how should she structure it?A. As a corporation.B. As a general partnership.C. As a limited partnership.D. As a sole proprietorship.E. As a real estate investment trust.89. Limited liability may be a characteristic of each of the following form(s) of organization EXCEPT a________________.A. Sole proprietorship.B. Corporation.C. Limited partnership.D. Limited liability company.90. Which of the following is a true statement concerning a general partnership?I. Partners are not responsible for the debts of the partnership.II. Partners generally do not manage the partnership.III. The income of a partnership is taxed at the partners' income tax rate.A. I onlyB. III onlyC. I and II onlyD. I and III onlyE. I, II, and III91. The death of the firm's owner(s) does NOT effectively dissolve which type(s) of organization?I. Sole proprietorship.II. Partnership.III. Corporation.A. I onlyB. II onlyC. III onlyD. I and III onlyE. II and III only92. Which of the following is considered a benefit of the corporate form of organization?I. Ease of the transfer of ownership.II. Limited life.III. Double taxation.A. I onlyB. II onlyC. I and II onlyD. I and III onlyE. I, II, and III

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93. A ________________ can lose, at most, what she has already invested in a firm.I. Common stockholder.II. Limited partner.III. General partner.IV. Sole proprietor.A. I onlyB. I and II onlyC. I, II, and IV onlyD. II, III, and IV onlyE. II and III only94. When does the double taxation problem faced by corporations exist?A. Whenever a corporation earns a profit, pays taxes on that profit, and then pays interest to itsbondholders.B.Whenever a corporation earns a profit, pays taxes on that profit, and then pays dividends to itsstockholders who pay personal taxes.C. Whenever a corporation earns a profit and pays taxes on that profit.D.Whenever a corporation earns a profit, pays taxes on that profit, and then pays dividends to its tax-exempt shareholders.E. Whenever stockholders are paid a dividend and are taxed on that dividend income.95. Which of the following is the BEST description of the goal of the financial manager in a corporationwhere shares are publicly traded?A. Maximize sales.B. Maximize profits.C. Avoid financial distress.D. Maintain steady earnings growth.E. Maximize the current value per share of the existing stock.96. A financial manager of a corporation is considering different operating strategies for the coming year.From a financial management standpoint, which of the following would be her optimal strategy?A. Undertake the plan that would reduce the overall riskiness of the firm.B. Undertake the plan that would maximize the current stock price.C. Undertake the plan that would result in the largest profits for the year.D. Undertake the plan that would maximize her personal wealth.E. Undertake the plan that would lead to the most stable stock price for the year.97. The total market value of the firm's equity is determined by _______________.A. The corporate treasurer.B. The firm's financial manager.C. The firm's stakeholders.D. The firm's stockholders.E. Regulatory authorities.98. Which of the following is a type of agency cost?A. The cost of an audit of the firm's financial statements.B. The cost of a corporate jet needed to keep tabs on foreign operations.C. Salaries paid to the firm's managers.D. The costs of financing the firm.E. The cost of buying insurance on the firm's assets.99. Ann is interested in purchasing Ted's factory. Since Ann is a poor negotiator, she hires Mary to negotiatethe purchase price. Identify the parties to this transaction.A. Mary is the principal and Ann is the agent.B. Ted is the principal and Ann is the agent.C. Mary is the agent while Ted and Ann together are principals.D. Ann is the principal and Mary is the agent.E. Ann is the principal and Ted is the agent.

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100.The Board of Directors of Beeline, Inc. has decided to base the salary of its financial manager entirelyupon the market share of the firm. Accordingly,A.The firm may incur some agency costs since the manager will be focused on the market share of thefirm rather than acting to maximize earnings.B.The financial manager will always act in the best interest of the shareholders since all agency costshave been eliminated through salary incentives.C.This arrangement may be unnecessary, since the goal of the firm is to maximize earnings forshareholders, and that is most likely accomplished through larger market share.D.The manager may not act to maximize the current value of the firm's stock, resulting in agency costsfor the firm's stockholders.E. The firm will incur some agency costs if the manager acts to maximize market share.101.Which of the following is/are correct regarding agency costs?I. Indirect costs occur when managers, acting to minimize the risk of the firm, forego investmentsshareholders would prefer they take.II. Direct costs occur when shareholders must incur costs to monitor the manager's actions.III. Direct costs occur when managers buy assets considered unnecessary by the firm's owners.A. I onlyB. I and II onlyC. II onlyD. II and III onlyE. I, II, and III102.Of the following, which statement regarding agency costs is false?A. An agency problem exists when there is a conflict of interest between the stockholders andmanagement of a firm.B. An agency problem exists when there is a conflict of interest between a principal and an agent.C.An indirect agency cost occurs when firm management avoids risky projects that would favourablyaffect the stock price because the managers are worried about keeping their jobs.D. A corporate expenditure that benefits stockholders but harms management is an agency cost.E. If agency costs get too high in the eyes of shareholders, they can begin a proxy fight to replace existingmanagement.103.Which of the following help ensure managers act in the best interest of owners?I. A compensation package for managers that ties their salary to the firm's share price.II. Managers are promoted only if the firm prospers.III. The threat that if the firm does poorly, shareholders will use a proxy fight to replace the existingmanagement.IV. There is a high degree of likelihood the firm will become a takeover candidate if the firm performspoorly.A. I and II onlyB. II and III onlyC. I, III, and IV onlyD. I and III onlyE. I, II, III, and IV104.Which of the following is a true statement concerning the economics of ethical decision-making?I. The higher the probability of detection, the more likely that one will cheat.II. The higher the sanctions imposed if detected, the less likely one is to cheat.III. The expected costs of unethical behaviour are lower if information about cheating is rapidly andwidely distributed.A. I onlyB. II onlyC. I and II onlyD. I and III onlyE. I, II, and III

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105.Which of the following markets is considered a dealer market?A. The Toronto Stock Exchange.B. The over-the-counter (OTC) Market.C. The real estate market.D. New York Stock Exchange.E. The Ontario Securities Commission.106.You are interested in purchasing 100 shares of stock in one of the largest corporations in the Canada. Youwould most likely purchase the shares in _______________.A. A secondary market operated as an auction market.B. A primary market operated as an auction market.C. A secondary market operated as a dealer market.D. A primary market operated as a dealer market.E. A secondary market operated as a money market.107.Which of the following does NOT correctly finish this sentence: In Canada, ____________.A. The OTC market does not have a central locationB. Over-the-counter markets are operated as auction marketsC. Financial markets function as both primary and secondary markets for debt and equity securitiesD. New issues of securities occur in primary marketsE. Auction markets have a physical location108.Which of the following is NOT a general criterion that must be met in order for a firm to be listed on theTSX?A. The firm must have a minimum number of shareholders owning at least 100 shares.B. The firm must have a minimum number of shares outstanding.C. The firm must have a minimum market value.D. The firm must have a minimum number of directors.E. The firm must have a minimum amount of assets.109.Which of the following would be considered a primary market transaction?A. A buy order to an investment banker for a new public stock offeringB. A buy order to a broker for shares of a company on the TSXC. A buy order to a broker for shares of a company on the Venture ExchangeD. A buy order to a dealer for shares of a company OTCE. A sell order to a broker for a stock listed on the TSX110.Which of the following is considered a "primary market" transaction?I. You buy shares in the public offering of a start-up company in the computer industry.II. Your mother sells you the shares she purchased in your uncle's latest business venture.III. You buy shares in Nortel Networks from your closest friend.A. I onlyB. II onlyC. I and II onlyD. I and III onlyE. I, II, and III111.A(n) ______________ is a sale of securities which typically does not require registration with theOSC.A. Initial public offering.B. Over-the-counter transaction.C. Primary market transaction.D. Secondary market transaction.E. Private placement.

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