1
Fundamentals of Corporate Finance, 4th Edition
Test Bank For
Fundamentals Of Corporate Finance, 4th Edition Robert
Parrino, Hue Hwa Au Yong, Nigel Morkel-Kingsbury,
Jennifer James, Paul Mazzola, James Murray, Lee Smales,
Xiaoting Wei Chapter 1-21
, 2
Fundamentals of Corporate Finance, 4th Edition
Table Of Contents
Chapter 1: The Financial Manager And The Firm ...................................................................................................................... 3
Chapter 2: The Financial System And The Level Of Interest Rates .................................................................................... 20
Chapter 3: The Financial System And The Level Of Interest Rates .................................................................................... 33
Chapter 4: Analyzing Financial Statements ................................................................................................................................ 56
Chapter 5: The Time Value Of Money ....................................................................................................................................... 79
Chapter 6: Discounted Cash Flows And Valuation .............................................................................................................. 110
Chapter 07: Risk And Return ..................................................................................................................................................... 141
Chapter 8: Bond Valuation And The Structure Of Interest Rates ................................................................................... 164
Chapter 9: Stock Valuation ......................................................................................................................................................... 193
Chapter 10: The Fundamentals Of Capital Budgeting ......................................................................................................... 225
Chapter 11: Cash Flows And Capital Budgeting ................................................................................................................... 253
Chapter 12: Evaluating Project Economics ............................................................................................................................. 280
Chapter 13: The Cost Of Capital ............................................................................................................................................. 307
Chapter 14: Working Capital Management ............................................................................................................................ 331
Chapter 15 How Firms Raise Capital....................................................................................................................................... 354
Chapter: 16 Capital Structure Policy ....................................................................................................................................... 377
Chapter 17: Dividends, Stock Repurchases, And Payout Policy ....................................................................................... 403
Chapter 18: Business Formation, Growth, And Valuation ................................................................................................. 428
Chapter 19: Financial Planning And Managing Growth ........................................................................................................ 451
Chapter 20: Options And Corporate Finance ....................................................................................................................... 477
Chapter 21: International Financial Management .................................................................................................................. 509
, 3
Fundamentals of Corporate Finance, 4th Edition
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 Interests 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
Format: True/False Learning Objective: Lo 1 Level Of Difficulty: Easy Bloom Code: 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. When A Firm Goes Bankrupt, It 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
, 4
Fundamentals of Corporate Finance, 4th Edition
Ima: Corporate Finance Aicpa: Resource Management
6. Capital Assets Are Generally Short Term In Nature.
A) True
B) False
Ans: B
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 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. Financing Decisions Determine 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
Bloomcode: Knowledge Aacsb: Analytic
Ima: Budget Preparation
Aicpa: Resource Management
9. The Dollar Difference Between A Firm’s Total Current Assets And Total Liabilities Is Called Its
Net Working Capital.
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
10. 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
11. 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
Fundamentals of Corporate Finance, 4th Edition
Test Bank For
Fundamentals Of Corporate Finance, 4th Edition Robert
Parrino, Hue Hwa Au Yong, Nigel Morkel-Kingsbury,
Jennifer James, Paul Mazzola, James Murray, Lee Smales,
Xiaoting Wei Chapter 1-21
, 2
Fundamentals of Corporate Finance, 4th Edition
Table Of Contents
Chapter 1: The Financial Manager And The Firm ...................................................................................................................... 3
Chapter 2: The Financial System And The Level Of Interest Rates .................................................................................... 20
Chapter 3: The Financial System And The Level Of Interest Rates .................................................................................... 33
Chapter 4: Analyzing Financial Statements ................................................................................................................................ 56
Chapter 5: The Time Value Of Money ....................................................................................................................................... 79
Chapter 6: Discounted Cash Flows And Valuation .............................................................................................................. 110
Chapter 07: Risk And Return ..................................................................................................................................................... 141
Chapter 8: Bond Valuation And The Structure Of Interest Rates ................................................................................... 164
Chapter 9: Stock Valuation ......................................................................................................................................................... 193
Chapter 10: The Fundamentals Of Capital Budgeting ......................................................................................................... 225
Chapter 11: Cash Flows And Capital Budgeting ................................................................................................................... 253
Chapter 12: Evaluating Project Economics ............................................................................................................................. 280
Chapter 13: The Cost Of Capital ............................................................................................................................................. 307
Chapter 14: Working Capital Management ............................................................................................................................ 331
Chapter 15 How Firms Raise Capital....................................................................................................................................... 354
Chapter: 16 Capital Structure Policy ....................................................................................................................................... 377
Chapter 17: Dividends, Stock Repurchases, And Payout Policy ....................................................................................... 403
Chapter 18: Business Formation, Growth, And Valuation ................................................................................................. 428
Chapter 19: Financial Planning And Managing Growth ........................................................................................................ 451
Chapter 20: Options And Corporate Finance ....................................................................................................................... 477
Chapter 21: International Financial Management .................................................................................................................. 509
, 3
Fundamentals of Corporate Finance, 4th Edition
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 Interests 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
Format: True/False Learning Objective: Lo 1 Level Of Difficulty: Easy Bloom Code: 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. When A Firm Goes Bankrupt, It 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
, 4
Fundamentals of Corporate Finance, 4th Edition
Ima: Corporate Finance Aicpa: Resource Management
6. Capital Assets Are Generally Short Term In Nature.
A) True
B) False
Ans: B
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 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. Financing Decisions Determine 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
Bloomcode: Knowledge Aacsb: Analytic
Ima: Budget Preparation
Aicpa: Resource Management
9. The Dollar Difference Between A Firm’s Total Current Assets And Total Liabilities Is Called Its
Net Working Capital.
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
10. 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
11. 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
