Multiple Choice
Identify the letter of the choice that best
completes the statement or answers the question.
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1.
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The
price that Brascan’s common shares trade at on the TSX are primarily based
upon: a. | The book value of the
shares | b. | The number and
quality of Board Directors | c. | The company’s earnings over the past five
years | d. | The expectation of
future company earnings | | |
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2.
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Common
shares can be described as: a. | A low-risk investment | b. | A residual form of ownership | c. | An investment that guarantees continual dividend
payments | d. | An investment that
formerly places restrictions on the company’s management | | |
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3.
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From
time to time companies, such as Reitmans, will purchase their shares on the open market. All of
the following are potential reasons to do so, EXCEPT: a. | Increase the company’s cash
position | b. | Decrease risk of
takeover | c. | Restructure a
company’s capital structure | d. | Purchase shares for future corporate
needs | | |
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4.
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Canada
Mercantile has just announced a reverse stock split of one common share for every three. Upon
completion, a shareholder with 1500 shares will have: a. | 4500 new shares | b. | 1500 new shares | c. | 500 new shares | d. | 3000 new shares | | |
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5.
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A
company has just announced that its key operating plant has just been destroyed in a fire. The
firm is expected to have the plant re-built in 2 – 3 years. Holding all else equal, what
is the most likely change to the company’s share price: a. | No change | b. | Share price will increase | c. | Uncertain | d. | Share price will decrease | | |
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