mgt224h-ap19.pdf - NAME (PRINT): Last/Surname STUDENT #:...

MGT 224 Exam Winter 2019 Page 1 of 19
NAME (PRINT):
Last/Surname First /Given Name
STUDENT #: SIGNATURE:
UNIVERSITY OF TORONTO MISSISSAUGA
APRIL 2019 FINAL EXAMINATION
MGT224H5S
Financial Accounting Theory & Policy I
Peter Thomas
Duration - 2 hours
Aids: Calculator Model(s): Financial calculator
The University of Toronto Mississauga and you, as a student, share a commitment to
academic integrity. You are reminded that you may be charged with an academic
offence for possessing any unauthorized aids during the writing of an exam. Clear,
sealable, plastic bags have been provided for all electronic devices with storage,
including but not limited to: cell phones, SMART devices, tablets, laptops, calculators,
and MP3 players. Please turn off all devices, seal them in the bag provided, and
place the bag under your desk for the duration of the examination. You will not be
able to touch the bag or its contents until the exam is over.
If, during an exam, any of these items are found on your person or in the area of your
desk other than in the clear, sealable, plastic bag, you may be charged with an
academic offence. A typical penalty for an academic offence may cause you to fail
the course.
Please note, once this exam has begun, you CANNOT re-write it.
Instructions:
This examination consists of nineteen (19) pages and five questions. Please answer directly on
the exam paper.
Marks:
Question 1 ______20 %
Question 2 _____ 25 %
Question 3 _____ 20 %
Question 4 _____ 15 %
Question 5 _____ 20 %
Total ______100

MGT 224 Exam Winter 2019 Page 2 of 19
Question 1 (20%)
On January 1, 2018, $2,000,000 of five-year, 6% convertible bonds were sold by Company A
(CA) for $2,100,000. Interest is payable on June 30 and December 31 each year. The bonds can
be converted in to 40,000 common shares at any time. At the time of issue, the market rate of
interest for bonds of similar risk and duration without the conversion option was 7%.
On January 1, 2019, the holders of $1,000,000 of the convertible bonds exercised their
conversion option and exchanged their bonds for 20,000 common shares. The market value of