midw2005 - McGill University Centre for Continuing...

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McGill University Centre for Continuing Education Winter 2005 MID TERM EXAMINATION Version A STUDENT NAME STUDENT NUMBER FINANCE I MGCR- 341-771 Lecturer: Therese Trainor Date: Time: February16, 2005 6:00 - 8:00 p.m. INSTRUCTIONS : You are permitted noiseless, non-programmable CALCULATORS . This is a closed book exam - no notes or scrap paper allowed. You may use the opposite side of the exam paper for any rough rough work. This examination is worth 30% of your final mark. This examination consists of 19 questions on 9 pages, 4 pages of tables and 2 pages of formulae. Please ensure that you have a complete examination paper before starting. MARK DISTRIBU TION Question Marks 1 TO 10 2 marks each = 20 11 to 17 8 marks each = 56 1
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18 12 19 12 Total 100 THIS EXAMINATION PAPER MUST BE RETURNED 2
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ONE  response to each of the following questions.  (2  marks each) 1. The process of planning and managing a firm's short-term assets and liabilities is called a. Working capital management b. Financial depreciation c. Agency cost analysis d. Capital budgeting e. Ratio analysis 2. Which of the following is/are correct regarding agency costs? I. Indirect agency costs occur when managers, acting to minimize the risk of the firm, forego investments shareholders 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 only. b. I and II only. c. II only. d. II and III only. e. I, II and III. 3. The purchase and sale of securities after the original issuance occurs in which market? a. Primary market. b. Secondary market. c. Dealer market. d. Auction market. e. Liquidation market. 4. The opening UCC balance for an asset class equals zero. Which of the following statements is most likely correct? a. The assets were fully depreciated, on an accounting basis. b. The capital gain taken on the asset sale reduced the UCC balance. c. A recapture occurred last period.
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midw2005 - McGill University Centre for Continuing...

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