TEST BANK
Fundamentals of Corporate Finance
Jonathan Berk, Peter DeMarzo, Jarrad Harford, David Stangeland, Andras Marosi
ST
────────────────────────────────────────────────────
5th Canadian Edition
UV
IA
?_
AP
PR
TEST BANK
OV
ED
? ?
, TABLE OF CONTENTS
Test Bank: Fundamentals of Corporate Finance, 5th Canadian Edition
By Berk, DeMarzo, Harford, Stangeland, and Marosi
CHAPTER 1 Corporate Finance and the Financial Manager
ST
CHAPTER 2 Introduction to Financial Statement Analysis
CHAPTER 3 The Valuation Principle: The Foundation of Financial Decision Making
CHAPTER 4 The Time Value of Money
UV
CHAPTER 5 Interest Rates
CHAPTER 6 Bonds
CHAPTER 7 Valuing Stocks
CHAPTER 8 Investment Decision Rules
IA
CHAPTER 9 Fundamentals of Capital Budgeting
CHAPTER 10 Risk and Return in Capital Markets
?_
CHAPTER 11 Systematic Risk and the Equity Risk Premium
CHAPTER 12 Determining the Cost of Capital
CHAPTER 13 Risk and the Pricing of Options
AP
CHAPTER 14 Raising Equity Capital
CHAPTER 15 Debt Financing
CHAPTER 16 Capital Structure
CHAPTER 17 Payout Policy
PR
CHAPTER 18 Financial Modeling and Pro Forma Analysis
CHAPTER 19 Working Capital Management
CHAPTER 20 Short-Term Financial Planning
CHAPTER 21 Risk Management
OV
CHAPTER 22 International Corporate Finance
CHAPTER 23 Leasing
CHAPTER 24 Mergers and Acquisitions
ED
CHAPTER 25 Corporate Governance
? ?
, Fundamentals of Corporate Finance, 5Ce (Berk)
Chapter 1 Corporate Finance and the Financial Manager
1.1 Why Study Finance?
1) The Valuation Principle shows how to make the costs and benefits of a decision comparable so that we
ST
can evaluate them properly.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
UV
Objective: 1.1 Grasp the importance of financial information in both your personal and business lives
2) Which of the following best describes why the Valuation Principle is a key concept in making financial
decisions?
A) It shows how to assign monetary value to intangibles such as good health and well-being.
IA
B) It allows fixed assets and liquid assets to be valued correctly.
C) It gives a good indication of the net worth of a person, item, or company and can be used to estimate
any changes in that net worth.
D) It shows how to make the costs and benefits of a decision comparable so that we can weigh them
?_
properly.
E) It allows us to produce accurate financial statements.
Answer: D
Diff: 1 Type: MC
AP
Skill: Conceptual
Objective: 1.1 Grasp the importance of financial information in both your personal and business lives
3) Both personal financial decisions and business financial decisions can best be made by applying the:
PR
A) Internal Ranking Criteria.
B) Best Alternatives Matrix.
C) Valuation Principle.
D) Financial Comparison Analysis.
E) Law of One Price.
OV
Answer: C
Diff: 1 Type: MC
Skill: Conceptual
Objective: 1.1 Grasp the importance of financial information in both your personal and business lives
ED
??
, 1.2 The Three Types of Firms
1) Partnerships are the most common type of business firm in the world.
Answer: FALSE
Diff: 1 Type: TF
Skill: Conceptual
ST
Objective: 1.2 Understand the important features of the three main types of firms and see why the
advantages of the corporate form have led it to dominate economic activity
2) Corporations have come to dominate the business world through their ability to raise large amounts of
UV
capital by sale of ownership shares to anonymous outside investors.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
Objective: 1.2 Understand the important features of the three main types of firms and see why the
IA
advantages of the corporate form have led it to dominate economic activity
3) Which of the following types of firms do NOT have limited liability?
A) sole proprietorships
?_
B) limited partnerships
C) private corporations
D) public corporations
E) limited liability partnerships
AP
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
Objective: 1.2 Understand the important features of the three main types of firms and see why the
PR
advantages of the corporate form have led it to dominate economic activity
4) Over 60% of all Canadian business profit is generated by which type of firm?
A) sole proprietorships
B) partnerships
OV
C) limited partnerships
D) corporations
E) limited liability partnerships
Answer: D
Diff: 1 Type: MC
ED
Skill: Conceptual
Objective: 1.2 Understand the important features of the three main types of firms and see why the
advantages of the corporate form have led it to dominate economic activity
??
Fundamentals of Corporate Finance
Jonathan Berk, Peter DeMarzo, Jarrad Harford, David Stangeland, Andras Marosi
ST
────────────────────────────────────────────────────
5th Canadian Edition
UV
IA
?_
AP
PR
TEST BANK
OV
ED
? ?
, TABLE OF CONTENTS
Test Bank: Fundamentals of Corporate Finance, 5th Canadian Edition
By Berk, DeMarzo, Harford, Stangeland, and Marosi
CHAPTER 1 Corporate Finance and the Financial Manager
ST
CHAPTER 2 Introduction to Financial Statement Analysis
CHAPTER 3 The Valuation Principle: The Foundation of Financial Decision Making
CHAPTER 4 The Time Value of Money
UV
CHAPTER 5 Interest Rates
CHAPTER 6 Bonds
CHAPTER 7 Valuing Stocks
CHAPTER 8 Investment Decision Rules
IA
CHAPTER 9 Fundamentals of Capital Budgeting
CHAPTER 10 Risk and Return in Capital Markets
?_
CHAPTER 11 Systematic Risk and the Equity Risk Premium
CHAPTER 12 Determining the Cost of Capital
CHAPTER 13 Risk and the Pricing of Options
AP
CHAPTER 14 Raising Equity Capital
CHAPTER 15 Debt Financing
CHAPTER 16 Capital Structure
CHAPTER 17 Payout Policy
PR
CHAPTER 18 Financial Modeling and Pro Forma Analysis
CHAPTER 19 Working Capital Management
CHAPTER 20 Short-Term Financial Planning
CHAPTER 21 Risk Management
OV
CHAPTER 22 International Corporate Finance
CHAPTER 23 Leasing
CHAPTER 24 Mergers and Acquisitions
ED
CHAPTER 25 Corporate Governance
? ?
, Fundamentals of Corporate Finance, 5Ce (Berk)
Chapter 1 Corporate Finance and the Financial Manager
1.1 Why Study Finance?
1) The Valuation Principle shows how to make the costs and benefits of a decision comparable so that we
ST
can evaluate them properly.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
UV
Objective: 1.1 Grasp the importance of financial information in both your personal and business lives
2) Which of the following best describes why the Valuation Principle is a key concept in making financial
decisions?
A) It shows how to assign monetary value to intangibles such as good health and well-being.
IA
B) It allows fixed assets and liquid assets to be valued correctly.
C) It gives a good indication of the net worth of a person, item, or company and can be used to estimate
any changes in that net worth.
D) It shows how to make the costs and benefits of a decision comparable so that we can weigh them
?_
properly.
E) It allows us to produce accurate financial statements.
Answer: D
Diff: 1 Type: MC
AP
Skill: Conceptual
Objective: 1.1 Grasp the importance of financial information in both your personal and business lives
3) Both personal financial decisions and business financial decisions can best be made by applying the:
PR
A) Internal Ranking Criteria.
B) Best Alternatives Matrix.
C) Valuation Principle.
D) Financial Comparison Analysis.
E) Law of One Price.
OV
Answer: C
Diff: 1 Type: MC
Skill: Conceptual
Objective: 1.1 Grasp the importance of financial information in both your personal and business lives
ED
??
, 1.2 The Three Types of Firms
1) Partnerships are the most common type of business firm in the world.
Answer: FALSE
Diff: 1 Type: TF
Skill: Conceptual
ST
Objective: 1.2 Understand the important features of the three main types of firms and see why the
advantages of the corporate form have led it to dominate economic activity
2) Corporations have come to dominate the business world through their ability to raise large amounts of
UV
capital by sale of ownership shares to anonymous outside investors.
Answer: TRUE
Diff: 1 Type: TF
Skill: Conceptual
Objective: 1.2 Understand the important features of the three main types of firms and see why the
IA
advantages of the corporate form have led it to dominate economic activity
3) Which of the following types of firms do NOT have limited liability?
A) sole proprietorships
?_
B) limited partnerships
C) private corporations
D) public corporations
E) limited liability partnerships
AP
Answer: A
Diff: 1 Type: MC
Skill: Conceptual
Objective: 1.2 Understand the important features of the three main types of firms and see why the
PR
advantages of the corporate form have led it to dominate economic activity
4) Over 60% of all Canadian business profit is generated by which type of firm?
A) sole proprietorships
B) partnerships
OV
C) limited partnerships
D) corporations
E) limited liability partnerships
Answer: D
Diff: 1 Type: MC
ED
Skill: Conceptual
Objective: 1.2 Understand the important features of the three main types of firms and see why the
advantages of the corporate form have led it to dominate economic activity
??
