Instructor: Yervant Nessimian
E-mail: Yervant.nessimian@hansoncollege.com
MOG1002 – Financial Decision Making
Assignment One
1. If shares of both a high‐tech startup company and the Royal Bank promised cash flow of
$2 per share over the next year, for which shares would you be prepared to pay the higher
price? Why?
2. Dollarama Corporation has expected earnings per share of $2.00 in its first year, $4.00 its
second year, and then $10.00 per year for many more years. Dollar Tree Corporation has
expected earnings of $10.00 a share for three years only. Which company would you value
higher and why?
Multiple choice questions:
3. The primary goal of financial management is to:
A. Increased earnings
B. Maximizing cash flow
C. Maximizing shareholder wealth
D. Minimizing risk of the firm
E. None of the above.
4. A good risk-return management implies that:
A. the firm should take as few risks as possible.
B. consistent with the objectives of the firm, an appropriate trade-off between risk and
return should be determined.
C. the firm should earn the highest return possible.
D. the firm should value future profits more highly than current profits.
5. One of the major disadvantages of a sole proprietorship is:
A.
B.
C.
D.
that there is unlimited liability to the owner.
the simplicity of decision making.
low organizational costs.
low operating costs.
Instructor: Yervant Nessimian
E-mail: Yervant.nessimian@hansoncollege.com
6- A corporation is not:
A. owned by shareholders who enjoy the privilege of limited liability.
B. easily divisible between owners.
C. a separate legal entity with perpetual life.
D. a separate legal entity with limited life.
Rubric for questions one and two:
Needs
Improvement
Use of Evidence
to Support
Argument
Writing
No evidence is used to
support an argument.
Response is poorly
organized and difficult
to read. There are
several spelling and/or
grammatical errors.
Writing lacks clarity
and conciseness.
Competent
Excellent
One piece of
evidence is used to
support an argument
Response is generally
well organized and
most of the argument
is easy to follow.
There are only a few
minor spelling or
grammatical errors.
Writing is mostly
clear but may lack
conciseness.
Two or more pieces of
evidence are used to support
an argument.
Response is coherently
organized, and the logic is
easy to follow. There are no
spelling or grammatical
errors. Writing is clear,
concise and persuasive.