Fundamentals of Corporate Finance, 5th Edition by Robert , David , Bates & Gillan. (All Chapters 1-21) | TEST BANK

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Fundamentals of Corporate Finance, 5th Edition by Robert Parrino, David Kidwell, Bates &
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Gillan. ISBN 9781119795438
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Chapter 1-21 df




1

,Chapter 1 df The Financial Manager and the Firm
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1) The financial manager is responsible for making decisions that are in the best interests of
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the firm's owners.
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Answer: TRUE d f


Diff: 1
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Learning Objective: LO 1 df d f df


Bloomcode: Knowledge
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AACSB: Analytic
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IMA: FSA d f d f


AICPA: Process and Resource Management Perspectives
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2) A patent is a productive asset for a technology-based
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firm. Answer: TRUE
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Diff: 1 df


Learning Objective: LO 1 df d f df


Bloomcode: Knowledge
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AACSB: Analytic
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IMA: Business Economics
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AICPA: Global and Industry Perspectives
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3) Intangible assets generate most of a manufacturing firm's cash
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flows. Answer: FALSE
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Diff: 2 df


Learning Objective: LO 1 df d f df


Bloomcode: Application
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AACSB: Analytic
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IMA: Corporate Finance
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AICPA: Process and Resource Management Perspectives
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4) The most fundamental way a business can grow in size is by reinvesting cash flows or earnings.
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Answer: TRUE
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Diff: 1 df


Learning Objective: LO 1 df d f df


Bloomcode: Knowledge
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AACSB: Analytic
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IMA: FSA d f d f


AICPA: Process and Resource Management Perspectives
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2

,5) A firm that goes bankrupt will always be
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liquidated. Answer: FALSE
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Diff: 2 df


Learning Objective: LO 1 df d f df


Bloomcode: Application
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AACSB: Analytic
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IMA: Corporate Finance
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AICPA: Resource
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Management
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6) Capital assets are generally short term in
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nature. Answer: FALSE
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Diff: 1 df


Learning Objective: LO 1 df d f df


Bloomcode: Knowledge
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AACSB: Analytic
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IMA: Corporate Finance
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AICPA: Process and Resource Management Perspectives
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7) A good capital budgeting or investment decision is one in which the benefits are worth more
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to the firm than the cost of the project.
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Answer: TRUE d f df


Explanation: Regardless of the project, a good investment is one in which the benefits are worth
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more to the firm than the costs of the asset.
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Diff: 2 df


Learning Objective: LO 1 df d f df


Bloomcode: Analysis
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AACSB: Analytic
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IMA: Budget Preparation
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AICPA: Resource
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Management
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8) Investment decisions determine how firms raise capital to pay for their
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investments. Answer: FALSE
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Diff: 1 df


Learning Objective: LO 1 df d f df


Bloomcode: Knowledge
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AACSB: Analytic
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IMA: Investment Decisions
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AICPA: Strategic/Critical
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Thinking
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9) Net working capital is the dollar difference between a firm's total current assets and
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total liabilities.
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Answer: FALSE d f


Diff: 1
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Learning Objective: LO 1 df d f df


Bloomcode: Knowledge
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3

, AACSB: Analytic
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IMA: Budget Preparation
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AICPA: Process and Resource Management Perspectives
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4