1. Who is responsible for ethics in an organization?

	A.	Human resource (HR)
	B.	Senior Management
	C.	All of the options.
	D.	Employee

2. In publicly traded firms, the managers are hired and fired by stockholders and one of the mechanisms used to exercise this control is the annual meeting. Stockholders who are unable to go to the annual meeting can vote by proxy, but many of them dont exercise that right. Barring a change in the corporate charter, what happens to these unvoted proxies at most US companies?

	A.	There are counted as votes against management at the annual meeting
	B.	They are not counted as votes at the annual meeting
	C.	They are counted as votes for the management at the annual meeting
	D.	None of the options
	E.	They are split evenly for and against management at the annual meeting

3.

What motivates companies to engage in CSR?

	A.	Companies want to do the right thing
	B.	Being good corporate citizens is a good practice
	C.	Companies today are held to higher standards than ever before
	D.	All of the options

4. Which of the following statements on consequences of a company to go public is FALSE?

	A.	Diversification for owners and early investors
	B.	Better access to capital markets.
	C.	Monitoring management is more efficient
	D.	Costly process and tedious disclosure requirement

5.

Which of the following statements is FALSE?

	A.	To justify a takeover based on operating losses, management would have to argue that the tax savings are above what the firm would save using carryforward provisions.
	B.	It is possible to combine two companies with the result that the earnings per share of the merged company exceed the premerger earnings per share of either company, even when the merger itself creates no economic value.
	C.	When an acquirer buys a private target, it provides the target's owners with a way to reduce their risk exposure by cashing out their investment in the private target and reinvesting in a diversified portfolio.
	D.	None of the options.

6. Suppose that Alpha pays $3 fully franked dividend and the associated franking credit is valued by the market at 0.35. As an Australian investor, if you are selling your shares at the ex-dividend price and the corporate tax rate is 30%, the amount of share price fall on the ex-dividend day is $____.

7. LMN Corporation, a real estate corporation, is planning to pay a dividend of $0.50 per share. Most of the investors in LMN corporation are other corporations, who pay 40% of their ordinary income and 28% of their capital gains as taxes. However, they are allowed to exempt 85% of the dividends they receive from taxes. Under the classic tax system, if the shares are selling at $10 per share, how much would you expect the stock price to drop on the ex-dividend day?

	A.	$0.45
	B.	$0.50
	C.	$1.00
	D.	$0.65

8. You own a small manufacturing plant that currently generates revenues of $2 million per year. Next year, based upon a decision on a long-term government contract, your revenues will either increase by 20% or decrease by 25%, with equal probability, and stay at that level as long as you operate the plant. Other costs run $1.6 million per year. You can sell the plant at any time to a large conglomerate for $5 million and your cost of capital is 10%.

Given the embedded option to sell the plant, the value of your plant will be closest to:

	A.	$4.0 million.
	B.	$8.0 million.
	C.	$6.5 million.
	D.	$5.0 million.