Type:
Test Bank
Resource:
Fundamentals of Corporate Finance
Edition:
2nd Edition
Author(s):
Robert Parrino David S. Kidwell Thomas Bates
Test Bank, Fundamentals of Corporate Finance, 2e
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 1. The financial manager is responsible for making decisions that are in the best interest of the firm's owners. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 2. The demand for a potential business product, as well as the identification of what product or services is to be produced, are both contained in a business plan. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 3. The local Republican Party is a stakeholder in a local firm that makes no political donations to either party. A) True B) False Ans: B
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 4. A patent is a productive asset for a technology-based firm. A) True B) False Ans: A
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Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium 5. Intangible assets generate most of a manufacturing firm's cash flows. A) True B) False Ans: B
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 6. The most fundamental way that a business can grow in size is from the reinvestment of cash flows or earnings. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium 7. When bankruptcy occurs, the firm will always be liquidated. A) True B) False Ans: B
Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium 8. Capital assets are generally short term in nature. A) True B) False Ans: B
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Format: True/False Learning Objective: LO 1 Level of Difficulty: Medium 9. A good capital budgeting decision is one in which the 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: Medium 10. The financing decision determines how firms raise cash to pay for their investments. A) True B) False Ans: A
Format: True/False Learning Objective: LO 1 Level of Difficulty: Easy 11. The dollar difference between current assets and total liabilities is called working capital. A) True B) False Ans: B
Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 12. A sole proprietorship is an owner's only business. A) True B) False Ans: B
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Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium 13. The greatest number of businesses in the United States are corporations. A) True B) False Ans: B
Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium 14. Unlimited liability means that the owner of a firm is responsible for paying all the firm's bills. A) True B) False Ans: A
Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium 15. The process of transferring ownership of a sole proprietorship is relatively easy. A) True B) False Ans: B
Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium 16. General partners in a business have limited liability with regard to their firm's obligations. A) True B) False Ans: B
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Format: True/False Learning Objective: LO 2 Level of Difficulty: Medium 17. Most large corporations are incorporated in New York because of its favorable tax treatment of corporate income and its statutes protecting the rights of its owners. A) True B) False Ans: B
Format: True/False Learning Objective: LO 2 Level of Difficulty: Easy 18. 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 19. Privately held corporations are allowed to have shareholders. A) True B) False Ans: A
Format: True/False Learning Objective: LO 3 Level of Difficulty: Easy 20. The treasurer of a corporation usually reports to the CFO of the firm. A) True B) False Ans: A
Format: True/False Learning Objective: LO 3 Level of Difficulty: Easy 21. The external auditors of the firm report their findings directly to the CFO of the firm. A) True B) False Ans: B 1-5
Format: True/False Learning Objective: LO 4 Level of Difficulty: Easy 22. 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: Easy 23. An agency problem can arise when the agent of the firm is the sole owner of the firm. A) True B) False Ans: B
Format: True/False Learning Objective: LO 5 Level of Difficulty: Medium 24. 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 25. Corruption in business does not affect the functioning of the financial markets. A) True B) False Ans: B
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