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Copyright © 2016 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited 2
MULTIPLE CHOICE QUESTIONS
- Finance is the study of how and under what terms
- savings are allocated between lenders and borrowers.
- investments are allocated between investors and brokers.
- institutions with excess money make share purchase decisions.
- households allocate money between spending and saving.
Answer: a
Type: Definition
Difficulty: Easy
Learning Objective: Define finance and explain what is involved in the study of finance.
Section Reference: Finance Defined
- A financial security is
- a jail term for a financial manager that has committed fraud.
- a contract that is created only when a new stock is issued to the public.
- a financial contract created whenever funds are transferred.
- a contract that is created only when a new bond is first sold.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: Define finance and explain what is involved in the study of finance.
Section Reference: Finance Defined
- Which of the following does NOT appear as an item on Canada’s balance sheet, as presented
- non-residential structures
- net worth or equity
- net foreign liabilities
- net foreign assets
in the text?
Answer: d
Type: Definition
Difficulty: Medium
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
- Human capital is
- based on only the current skills, but not the education, of a country’s citizens.
- based on only the education, but not the current skills, of a country’s citizens.
- based on the skills and capital of citizens and should be included in a country’s wealth.
(Introduction to Corporate Finance, 4th Canadian Edition 4e Laurence Booth, Sean Cleary, Ian Rakita) (Test Bank all Chapters) 1 / 4
- - 3 Test Bank for Introduction to Corporate Finance, Fourth Canadian Edition
Copyright © 2016 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited
- difficult to measure and should therefore not be included in a country’s wealth.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
- Which of the following items is NOT a real asset?
- land
- television
- bond
- gold mine
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
- In the following list, which item is a financial asset?
- land
- bond
- building
- inventory
Answer: b
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
- What is the main difference between real assets and financial assets?
a) Real assets are tangible and financial assets are intangible.
b) Real assets have known values, while the values of financial assets are not known.
c) Real assets are intangible and financial assets are tangible.
d) Real assets have unknown values, while the values of financial assets are known.
Answer: a
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
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An Introduction to Finance 1 - 4
Copyright © 2016 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited 4
- If Canadian households, in aggregate, own real assets with a market value of $3.194 trillion,
- $3.194 trillion
- $5.538 trillion
- $–0.850 trillion
- $0.850 trillion
and also own net financial assets with a market value of $2.344 trillion, the total net assets of Canadian households have a market value of
Answer: b
Type: Calculation
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Feedback: $5.538 = $3.194 + $2.344
- Given the following hypothetical information regarding the real and financial assets in Canada
for 2015 (numbers in $ billions):
Real Assets Net Financial Assets Government 677 –658 Business 2,202 –1,635 Households 3,194 2,344
What is the value of the total net assets in Canada for 2015?
- $5,842 billion
- $6,086 billion
- $6,124 billion
- $6,105 billion
Answer: c
Type: Calculation
Difficulty: Medium
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Feedback: $6,124 = $677 + $2,202 + $3,194 – $658 – $1,635 + $2,344
- You are provided with the following hypothetical information regarding the real and financial
assets in Canada for 2015 (numbers in $ billions):
Real Assets Net Financial Assets Government 677 –658 Business 2,202 –1,635 Households 3,194 2,344 3 / 4
- - 5 Test Bank for Introduction to Corporate Finance, Fourth Canadian Edition
Copyright © 2016 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited
What is the value of the net financial assets owned by non-residents for 2015?
- $901 billion
- $51 billion
- $2,293 billion
d) There is not enough information to answer the question.
Answer: b
Type: Calculation
Difficulty: Difficult
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Feedback: $51 billion = $2,344 – $658 – $1,635. The value of net financial assets held by non- residents is equal to the negative of the sum of the net financial assets of government, businesses, and households.
- Which of the following sectors is NOT a user of savings in the economy?
- business sector
- household sector
- government sector
- banking sector
Answer: b
Type: Concept
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
- In Canada, the primary provider of funds to business and government is (are)
- international banks.
- large Canadian banks.
- the household sector.
- market intermediaries.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
Section Reference: The Financial System
- Entities that invest funds on behalf of others and change the nature of the transactions are
- brokers.
- financial intermediaries.
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