Final Exam_Fall 2008_Tsing Hua_Blackboard

Final Exam_Fall 2008_Tsing Hua_Blackboard - 1 Student Name:...

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1 Student Name: _____________________________________________ Student ID Number: ____________________________________________ Corporate Finance Final Examination Dr. YiLin Wu Fall 2008 Instructions 1. This is a closed book examination 2. This is a 3 hour exam. 3. You may use pen (NO pencil), rubber, ruler, calculator, and two pieces of A4 letter. If you use pencil, the grade is zero . 4. The exam paper has all 18 pages including this cover. 5. Please read the questions carefully!
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2 I. Each question counts 2 points 1. Which of the following is most correct? A. Warrant gives the owner the obligation to sell securities directly to the firm at a fixed price for a specified time. B. Warrant gives the owner the right to purchase securities directly from the firm at a fixed price for a specified time. C. Warrant gives the owner the obligation to purchase securities directly from the firm at a fixed price for a specified time. D. Warrant gives the owner the right to sell securities directly to the firm at a fixed price for a specified time. E. None of the above statements is correct. 2. Which of the following is most correct? Warrants are similar to traded options except : A. Only warrants have exercise prices. B. Only warrants depend on changes in the underlying stock to determine value. C. Warrants affect the number of shares outstanding. D. Both A and C. E. Both A and B. 3. Which of the following would not describe the difference between warrants and call options? A. Warrants are issued by firms whereas call options are issued by individuals. B. Call options have an exercise price whereas warrants do not. C. Exercising of warrants creates dilution whereas exercising all options does not. D. When call options are exercised existing shares trade hands whereas if
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warrants are exercised new stock must be issued. E. None of the above. 4. Two major differences between a warrant and a call option are: A. Warrants are contracts outside of the firm while options are within the firm. B. Warrants have long maturities while options are usually short maturities. C. Warrant exercise dilutes the value of equity while option exercise does not. D. Both A and C. E. Both B and C. 5. The exercise of warrants creates new shares which: A. Increases the total number of shares but does not affect share value. B. Increases the total number of shares which can reduce an individual’s share value. C. Does not change the number of shares outstanding similar to options. D. Increases share value because cash is paid into the firm at the time of warrant exercise. E. None of the above. 6. If a corporate security can be exchanged for a fixed number of shares of stock, the security is said to be: A. Callable. B.
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This note was uploaded on 04/18/2010 for the course FINANCE 936116531 taught by Professor Wuyiling during the Spring '10 term at Nashville State Community College.

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Final Exam_Fall 2008_Tsing Hua_Blackboard - 1 Student Name:...

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