Test Bank for Corporate Finance, 6th Canadian Edition by Jonathan Berk, Peter DeMarzo - All Chapters 1 to 31 |bComplete Solution | Grade A+

Created By: /f


A

Test Bank for Corporate Finance, 6th Canadian Edition by
vv vv vv vv vv vv vv vv




vv Jonathan Berk, Peter DeMarzo - Complete Chapters vv vv vv / f vv vv vv




Included (Chap 1 to 31) A+
vv vv vv vv vv vv




Chapter 1 /f The Corporation and Financial Markets
/f /f /f /f




1.1 The Three Types of Firms
/f /f /f / f




1) A sole proprietorship is owned by:
/f /f /f /f /f




A) one person. /f




B) two or more people.
/f /f /f




C) shareholders.
D) bankers. Answer: /f




A Diff: 1 Type: MC
/f /f /f /f




Topic : 1.1/f /f The Three Types of Firms
/f /f /f / f




2) Which of the following organization forms is the most common in the economy?
/f /f /f /f /f /f /f /f /f /f /f /f




A) Limited Liability Partnership
/f /f




B) Limited Partnership /f




C) Sole Proprietorship
/f




D) PubliclyTraded Corporation Answer:
/f /f /f




/f C Diff: 1Type: MC
/f /f /f




Topic : 1.1/f /f The Three Types of Firms
/f /f /f / f




3) Which of the following organization forms earns the most revenue?
/f /f / f /f /f / f /f /f /f




A) Privately Owned Corporation /f /f




B) Limited Partnership /f




C) Publicly Owned Corporation /f / f




D) Limited Liability Company Answer:
/f /f /f




/f C Diff: 1Type: MC
/f /f /f




Topic : 1.1/f /f The Three Types of Firms
/f /f /f / f




A+ Page 1/f

,Created By: /f


A


4) Which of the following is NOT an advantage of a sole proprietorship?
/f /f /f /f /f /f / f /f /f /f / f




A) Single taxation /f




B) Ease of setup /f /f




C) Limited liability /f




D) No separation of ownership and control Answer:
/f /f /f /f /f /f




C Diff: 2 Type: MC
/f /f /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




5) Which of the following statements regarding limited partnerships is true?
/f /f /f /f /f /f /f /f /f




A) There is no limit on a limited partner's liability.
/f /f /f /f /f /f /f /f




B) A limited partner's liability is limited by the amount of his investment.
/f /f /f /f /f /f /f /f /f /f /f




C) A limited partner is not liable until all of the assets of the general partners
/f /f /f /f /f /f /f /f /f /f / f /f / f /f




have been exhausted.
/f /f /f




D) A general partner's liability is limited by the amount of his investment.
/ f /f / f /f /f /f /f / f /f /f /f




/f Answer: B Diff: 2 /f /f /f Type: MC /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




6) Which of the following are advantages of incorporation?
/f /f /f /f /f /f /f




A) Access to capital markets /f /f /f




B) Limited liability /f




C) Unlimited life /f




D) All of the above Answer:
/f /f /f /f




/f D Diff: 2 Type: MC
/f /f /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




7) In Canada, a limited liability partnership, LLP, is essentially:
/f / f /f /f /f / f /f /f




A) a limited partnership without limited partners.
/f /f /f /f /f




B) a limited partnership without a general partner.
/f /f /f /f /f /f




C) just another name for a limited partnership.
/f /f /f / f /f / f




D) just another name for a corporation. Answer: B
/f /f / f /f /f /f /f




A+ Page 2
/f

,Created By: /f


A
Diff: 1 /f / f Type: MC /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




8) In Canada, which of the following business organization forms cannot avoid
/f /f /f /f /f /f /f /f /f /f




/f double taxation? /f




A) Limited Partnership /f




B) Publicly Traded Corporation /f / f




C) Privately Owned Corporation /f /f




D) Limited Liability Company Answer: /f /f /f




/f B Diff: 1Type: MC
/f /f /f




Topic : 1.1 /f / f The Three Types of Firms /f /f /f / f




9) In Canada, the dividend tax credit gives some relief by effectively giving:
/f /f /f /f /f /f /f /f /f /f /f




A) a lower tax rate on dividend income than on other sources of income.
/f /f / f /f /f /f /f /f /f /f /f / f




B) a higher tax rate on dividend income than on other sources of income.
/f /f / f /f /f /f /f /f /f /f /f / f




C) the same tax rate on dividend income as on other sources of income.
/f /f / f /f /f /f /f /f /f /f /f /f




D) a tax rate of zero on dividend income compared to other sources of income.
/f / f /f /f /f /f /f /f /f /f /f / f /f




/f Answer: A Diff: 1 /f /f /f Type: MC /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




10) Which of the following statements is most correct?
/f /f /f /f /f /f /f




A) An advantage to incorporation is that it allows for less business regulation.
/f /f /f /f /f /f /f /f /f /f /f




B) An advantage of a corporation is that it is subject to double taxation.
/f /f /f /f /f /f /f /f /f /f /f /f




C) Unlike a partnership, a disadvantage of a corporation is that it has limited liability.
/f /f / f /f /f /f /f /f /f /f / f /f /f




D) Corporations face more regulations when compared to partnerships. Answer: /f /f /f /f /f /f /f /f




/f D Diff: 2
/ f /f Type: MC /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




11) In Canada, the distinguishing feature of a corporation is that:
/f /f /f /f /f /f /f /f /f




A) there is no legal difference between the corporation and its owners.
/f /f /f /f /f /f /f /f /f /f




B) it is a legally defined, artificial being, separate from its owners.
/f /f /f /f /f /f /f /f /f /f




A+ Page 3 /f

, Created By: /f


A
C) it spreads liability for its corporate obligations to all shareholders.
/f /f /f /f / f /f /f /f /f




D) it provides limited liability only to small shareholders. Answer:
/f /f /f /f /f /f /f /f




/f B / f Diff: 2 /f Type: MC /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




12) Which of the following is subject to double taxation in Canada?
/f /f /f /f /f /f /f /f /f /f




A) Corporation
B) Partnership
C) Sole proprietorship /f




D) Both A and B Answer: /f /f /f /f




/f A Diff: 1 Type: MC
/f /f /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




13) The Canada Revenue Agency, CRA, allows an exemption from double taxation
/f /f /f /f /f /f / f /f /f /f




/f for certain flow- through entities where all income produced by the business flows to the
/f /f /f /f /f /f /f /f /f /f /f /f /f /f




investors and virtually no earnings are retained within the business. These
/f / f / f / f / f / f / f / f / f / f / f




/ f entities are called: / f /f




A) Canadian Federal Crown Corporations. /f /f /f




B) Canadian Controlled Corporations. /f /f




C) Income Trust Corporations. /f /f




D) Foreign Controlled Corporations. Answer: /f /f /f




/f C Diff: 1Type: MC
/f /f /f




Topic : 1.1 /f /f The Three Types of Firms /f /f /f / f




14) In 2006, the Canadian government effectively neutralized the tax advantages that
/f /f /f /f /f /f /f /f /f /f




/f had existed for most income trusts, relative to firms set up as
/ f / f / f / f / f / f / f / f / f / f / f




/ f corporations. The advantages that existed for income trusts before these
/ f /f / f / f / f / f / f / f / f




/ f changes were that: / f / f




A) income trusts avoided double taxation in that the Canada Revenue Agency
/f / f / f /f / f /f /f /f /f /f




/f did not collect corporate taxes but rather collected only personal taxes from
/ f /f / f / f / f / f / f / f /f / f / f




/ f income trust unit holders. / f / f /f




B) income trusts effectively afforded unlimited liabilityto unitholders while corporate
/f /f /f /f /f /f /f /f /f



A+ Page 4 /f