(Test Bank) Fundamentals Of Corporate Finance

Parrino,Kidwell,Bates,Gillan, 4

Business

Test Bank

4th Edition

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Test Bank for Fundamentals Of Corporate Finance, The downloadable file consists of 988 pages, and the total size of the file is 6.15 MB. Purchase now only for highly discounted price.

Author(s): Parrino, Kidwell, Bates, Gillan

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Test Bank for Fundamentals of Corporate Finance, 4e Robert Parrino, David Kidwell, Thomas Bates, Stuart Gillan (All Chapters) Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-1 Chapter 1: The Financial Manager and the Firm Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: FSA AICPA: Resource Management 1. The financial manager is responsible for making decisions that are in the best interest s of the firm's owners. A) True B) False Ans: A Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 2. A patent is a productive asset for a technology -based firm. A) True B) False Ans: A Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 3. Intangible assets generate most of a manufacturing firm's cash flows. A) True B) False Ans: B Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-2 Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: FSA AICPA: Resource Management 4. The most fundamental way that a business can grow in size is the reinvestment of cash flows or earnings. A) True B) False Ans: A Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 5. A firm that goes bankrupt will always be liquidated A) True B) False Ans: B Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 6. Capital assets are generally short term in nature. A) True B) False Ans: B Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-3 Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Budget Preparation AICPA: Resource Management 7. A good capital budgeting or investment decision is one in which the perceived benefits are worth more to the firm than the cost of the asset. A) True B) False Ans: A Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Investment Decisions AICPA: Strategic/Critical Thinking 8. Investment decision s determine how firms raise cash to pay for their investments. A) True B) False Ans: B Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Investment Decisions AICPA: Strategic/Critical Thinking 9. Financing decisions determine how firms raise cash to pay for their investments. A) True B) False Ans: A Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-4 Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Budget Preparation AICPA: Resource Management 10. Net working capital is the dollar difference between a firm’s total current assets and total liabilities . A) True B) False Ans: B Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 11. A sole proprietorship is an owner's only business. A) True B) False Ans: B Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Global Perspective 12. Corporations hold the majority of all business assets and generate the majority of business revenues and profits in the United States . A) True B) False Ans: A Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-5 Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 13. Unlimited liability means that the owner of a firm is responsible for paying all the bills of the firm in the event of a bankruptcy . A) True B) False Ans: A Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 14. The process of transferring ownership of a sole proprietorship is relatively easy compared to a public corporation . A) True B) False Ans: B Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 15. General partners in a business have limited liability with regard to money owed to creditors. A) True B) False Ans: B Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-6 Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 16. C-Corporations do not have their income subject to double taxation. A) True B) False Ans: B Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 17. Privately held corporations are allowed to have stockholders . A) True B) False Ans: A Format: True/False Learning Objective: LO 3 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 18. The treasurer of a corporation usually reports to the CFO of the firm. A) True B) False Ans: A Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-7 Format: True/False Learning Objective: LO 3 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Reporting AICPA: Reporting 19. The external auditors of the firm report their findings directly to the CFO of the firm. A) True B) False Ans: B Format: True/False Learning Objective: LO 4 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Performance Measurement AICPA: Strategic/Critical Thinking 20. Maximizing revenue should be the goal of the firm. A) True B) False Ans: B Format: True/False Learning Objective: LO 5 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 21. An agency conflict can arise when the agent of the firm is the sole owner of the firm. A) True B) False Ans: B Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-8 Format: True/False Learning Objective: LO 5 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 22. The owners of a firm are unaffected by agency costs. A) True B) False Ans: B Format: True/False Learning Objective: LO 6 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Ethics IMA: Business Applications AICPA: Professional Demeanor 23. Fraudulent business practices do not affect the growth of the financial markets. A) True B) False Ans: B Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 24. To start a business, the owners need A) a market where there is demand for their product. B) a clear vision of what products or services they want to produce. C) the know -how to successfully market their product. D) all of the above. Ans: D Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-9 Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 25. A stakeholder is : A) someone geographically close to the firm's headquarters. B) someone who has a claim on the cash flows of the firm. C) some government agency. D) all of the above. Ans: B Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 26. If you have loaned capital to a firm, then you could be A) a manager . B) a stakeholder. C) a partner. D) all of the above. Ans: B Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 27. Which of the following is a stakeholder? A) An employee B) A lender C) The IRS D) All of the above Ans: D Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-10 Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Knowledge AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 28. A trademark is an example of : A) a liquid asset. B) an intangible asset. C) a contingent asset. D) none of the above. Ans: B Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 29. What is NOT a characteristic of a shareholder? A) Expects to receive dividends B) Expects to receive a capital gain on their investment C) Expects to receive interest D) Expects to have rights as defined in the corporation's charter and bylaws Ans C Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 30. Which of the following is a basic source of funds for a firm? A) Debt B) Equity C) Asset liquidations D) Both A and B Ans: D Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-11 Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 31. The cash remaining with the firm after paying its operating expenses, making payments to creditors, and taxes is called : A) earnings per share. B) capital contributed in excess of par. C) residual cash flow. D) assets. Ans: C Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 32. Cash dividends are paid out of : A) residual cash flows . B) liquidated assets. C) long-term debt. D) all of the above. Ans: A Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 33. Current liabilities are liabilities that : A) will be converted to cash within a year. B) must be paid within a year. C) will be converted to equity within a year. D) none of the above . Ans: B Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-12 Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Budget Preparation AICPA: Resource Management 34. Current assets are assets that: A) will be converted to cash within a year. B) must be paid within a year. C) will be converted to equity within a year. D) must be depreciated . Ans: A Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Budget Preparation AICPA: Resource Management 35. The c apital budgeting decision process can be described as A) how a firm's day -to-day financial matters should be managed. B) how a firm should finance its assets. C) which productive assets a firm should purchase . D) all of the above. Ans: C Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 36. Working capital management decisions help to determine : A) how a firm's day -to-day financial matters should be managed. B) how a firm should finance its assets. C) which productive assets a firm should purchase . D) all of the above. Ans: A Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-13 Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 37. Capital budgeting decisions generally have the most effect on : A) the asset portion of the balance sheet. B) the short -term portion of the balance sheet. C) the current liability portion of the balance sheet. D) all of the above. Ans: A Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Easy Bloomcode: Knowledge AACSB: Analytic IMA: Corporate Finance AICPA: Strategic/Critical Thinking 38. A good capital budgeting decision is : A) one in which the perceived benefits of the project are equal to the cost of the asset. B) one in which the perceived benefits of the project are less than the cost of the asset. C) one in which the perceived benefits of the project are more than the cost of the asset. D) all of the above. Ans: C Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 39. Financial markets in which equity and debt instruments with maturities greater than one year are traded are called : A) money markets. B) capital markets. C) Over the counter exchange. D) none of the above. Ans: B Fundamentals of Corporate Finance 4e Test Bank Copyright © 2018 John Wiley & Sons, Inc. 1-14 Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 40. Financial markets in which equity and debt instruments with maturities less than one year are traded are called: A) money markets. B) capital markets. C) Over the counter exchange. D) none of the above. Ans: A Format: Multiple Choice Learning Objective: LO 1 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Corporate Finance AICPA: Resource Management 41. The profitability of a firm can be negatively affected by : A) too much inventory. B) too little inventory. C) either A or B. D) neither A nor B. Ans: C Format: Multiple Choice Learning Objective: LO 2 Level of Difficulty: Medium Bloomcode: Comprehension AACSB: Analytic IMA: Business Economics AICPA: Industry/Sector Perspective 42. Which of the following business organizational form (s) subject (s) the owner(s) to unlimited liability? A) Sole proprietorship B) General partnership C) Corporation D) Both A and B Ans: D