Test Bank – Corporate Finance, 3rd Edition by Jonathan Berk & Peter DeMarzo (2026)

2026//2027TESTBANK FOR Corporate Finance, 3rd Edition by Jonathan
TESTBANK
Berk and
FORPeter
Corporate
DeMarzo.pdf
Finance, 3rd Edition by Jonathan Berk and Peter DeMarzo




TESTBANK FOR Corporate Finance, 3rd
Edition
by Jonathan Berk and Peter DeMarzo






,2026//2027TESTBANK FOR Corporate Finance, 3rd Edition by Jonathan
TESTBANK
Berk and
FORPeter
Corporate
DeMarzo.pdf
Finance, 3rd Edition by Jonathan Berk and Peter DeMarzo




Corporate Finance, 3e (Berk/DeMarzo)
Chapter 1 The Corporation

1.1 The Four Types of Firms

1) A sole proprietorship is owned by:
A) one person.
B) two of more persons.
C) shareholders.
D) bankers.
Answer: A
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Definition

2) Which of the following organization forms for a business does NOT avoid double taxation?
A) Limited partnership
B) "C" corporation
C) "S" corporation
D) Limited liability company
Answer: B
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual

3) Which of the following organization forms accounts for the most revenue?
A) "S" corporation
B) Limited partnership
C) "C" corporation
D) Limited liability company
Answer: C
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual

4) Which of the following organization forms accounts for the greatest number of firms?
A) "S" corporation
B) Limited partnership
C) Sole proprietorship
D) "C" corporation
Answer: C






,2026//2027TESTBANK FOR Corporate Finance, 3rd Edition by Jonathan
TESTBANK
Berk and
FORPeter
Corporate
DeMarzo.pdf
Finance, 3rd Edition by Jonathan Berk and Peter DeMarzo




Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual






, 2026//2027TESTBANK FOR Corporate Finance, 3rd Edition by Jonathan
TESTBANK
Berk and
FORPeter
Corporate
DeMarzo.pdf
Finance, 3rd Edition by Jonathan Berk and Peter DeMarzo




5) Which of the following is NOT an advantage of a sole proprietorship?
A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and control
Answer: C
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

6) Which of the following statements regarding limited partnerships is TRUE?
A) There is no limit on a limited partner's liability.
B) A limited partner's liability is limited by the amount of their investment.
C) A limited partner is not liable until all the assets of the general partners have been exhausted.
D) A general partner's liability is limited by the amount of their investment.
Answer: B
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

7) Which of the following is/are an advantage of incorporation?
A) Access to capital markets
B) Limited liability
C) Unlimited life
D) All of the above
Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual

8) Which of the following statements is most correct?
A) An advantage to incorporation is that it allows for less regulation of the business.
B) An advantage of a corporation is that it is subject to double taxation.
C) Unlike a partnership, a disadvantage of a corporation is that has limited liability.
D) Corporations face more regulations when compared to partnerships.
Answer: D
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual