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QUESTION 21 Which of the following describes net working capital? a. current assets minus current liabilities b.current assets minus inventory C. current assets minus cash d. long-term minus current liabilities QUESTION 22 What is the purpose of the cash conversion cycle (CCC)? a. It shows how long a firm must finance its mortgage capital. b. It shows how long is must finance its inventories. C. It shows how long a firm must finance its operating working capital. d. It shows how long a firm must finance its long-term capital. QUESTION 23 Westley Company's average age of accounts receivable is 50 days, the average age of accounts payable is 45 days, and the average age of inventory is 72 days. Assuming a 365-day year, what is the length of its cash conversion cycle? O a. 73 O b. 66 O c. 69 O d. 77 QUESTION 24 You recently sold to your brother 200 shares of Disney stock; the transfer was made through a broker, and the trade occurred on the TSX(Toronto Stock Exchange). Which type of transaction is this? O a. a money market transaction O b. a futures market transaction O c. a primary market transaction d. a secondary market transaction QUESTION 25 Why might a business choose to operate as a corporation rather than as a sole proprietorship or a partnership? a. Less of a corporation's income is generally subjected to taxes than would be true if the firm were a partnership. O b. Corporate investors are exposed to limited growth potential. O c. Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization. O d. Corporations generally face relatively few regulations. QUESTION 26 What is traded on money markets? O a. long-term bonds b.consumer automobile loans O c. foreign stocks O d. short-term debt securities QUESTION 27 Which circumstance would be most likely to lead to an increase in interest rates in the economy? O a. The economy falls into a recession. b. There is an increase in expected inflation. c. The federal government decides to try to stimulate the economy. O d. Households reduce their consumption and increase their savings. QUESTION 28 Recently, Hale Corporation announced the sale of 2.5 million newly issued shares of its stock at a price of $21 per share. Hale sold the stock to an investment banker, which in turn sold it to individual and institutional investors. Where did this stock sale take place? O a. primary market Ob.over-the-counter market O c. forex market d. secondary market QUESTION 29 Which of the following is an example of a primary market transaction? O a. One financial institution buys 200,000 shares of IBM share from another institution with help of an investment banker. O b.You sell 200 shares of IBM stock on the TSX through your broker. c. You invest $10,000 in a mutual fund, which then uses the money to buy $10,000 of IBM shares on the TSX. Od. IBM issues 2,000,000 shares of new stock and sells them to the public through an investment banker. QUESTION 30 ABC company has price earning ratio of 16 with earning per share of $2. What is the price of one share of this company. O $32 O $40 O $8 $44

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