QUESTION 19

1. When a firm initially acquires debt to help finance its operations, it is said that the firm is:

	A.	Increasing its marketability.
	B.	Increasing its operating cash flows.
	C.	Employing financial leverage.
	D.	Increasing its liquidity.
	E.	Spending its cash flow from assets.

QUESTION 20

1. Double taxation refers to which of the following scenarios?

	A.	The corporation pays taxes on revenues and expenses.
	B.	The corporation pays taxes on earnings, and creditors pay taxes on interest received.
	C.	Both bondholders and shareholders must pay taxes.
	D.	The corporation pays taxes on its earnings, and shareholders pay taxes on dividends.
	E.	The corporation pays taxes on revenues and earnings.

QUESTION 21

1. Average tax rate is best described as:

	A.	The total dollar value of tax that is paid.
	B.	The extra tax you would pay if you earned one more dollar.
	C.	Pre-payments to Canada Revenue Agency to lower tax commitments.
	D.	The rate set for different tax brackets.
	E.	The percentage of your income that goes to pay taxes.

QUESTION 22

1. When a corporation issues additional shares of common stock to the general public, they do so:

	A.	Through a dealer in the secondary market.
	B.	In the primary market.
	C.	Only through the OTC market.
	D.	Only through the private markets.
	E.	Through a broker in the secondary market.

QUESTION 23

1. Which one of the following statements concerning a proprietorship is true?

	A.	proprietor is personally responsible for 100% of the firm's liabilities.
	B.	Income from a proprietorship is taxed at a lower rate than other personal income.
	C.	A proprietorship can be a business jointly owned by two family members.
	D.	Income from a proprietorship is taxed as a separate entity.
	E.	A partial transfer of ownership is easier with a proprietorship than with a corporation.

QUESTION 24

1. Capital gains is best described as:

	A.	The increase in the market value of current assets.
	B.	The increase in value of shareholders' equity.
	C.	The growth in value of investments that were purchased at a lower price than the amount sold