FUNDAMENTALS OF CORPORATE
FINANCE 11TH CANADIAN EDITION
COMPLETE MASTER TEST BANK
This comprehensive master test bank provides a high-yielding study
resource meticulously tailored to the core principles of corporate
finance. Every multiple-choice question features a clear, italicized
answer key and an in-depth, bolded rationale designed to reinforce
complex quantitative and qualitative concepts. Perfect for exam
preparation, this plug-and-play study guide helps students master
financial statement analysis, valuation, and capital budgeting to
maximize their course grades.
Question 1: Which of the following corporate
management positions is primarily responsible
for managing a firm's cash and credit, financial
planning, and capital expenditures?
o A) Controller
o B) Chief Executive Officer
o C) Treasurer
o D) Public Relations Manager
o Answer: C
o Rationale: The treasurer is directly
responsible for managing cash, credit,
financial planning, and capital
expenditures, whereas the controller
handles cost and financial accounting,
, tax payments, and management
information systems.
Question 2: The primary goal of financial
management in a publicly traded corporation is
to maximize the:
o A) Current dividends paid per share.
o B) Total book value of the firm's assets.
o C) Current value per share of the existing
stock.
o D) Total revenue of the firm.
o Answer: C
o Rationale: The primary goal of financial
management is to maximize the current
value per share of the existing stock,
aligning management's goals with the
wealth of the owners (shareholders).
Question 3: A conflict of interest between the
stockholders and management of a firm is
known as a(n):
o A) Agency problem.
o B) Liability issue.
o C) Capital budgeting conflict.
, o D) Partnership dilemma.
o Answer: A
o Rationale: An agency problem arises
when there is a conflict of interest
between the principal (stockholders) and
the agent (management).
Question 4: What is the future value of $5,000
invested for 3 years at an annual interest rate of
6%, compounded annually?
o A) $5,900.00
o B) $5,955.08
o C) $6,000.00
o D) $6,120.35
o Answer: B
o Rationale: Future Value = 5,000 * (1 +
0.06)^3 = $5,000 * 1.191016 = $5,955.08.
Question 5: You want to have $10,000 in 5
years. If you can earn an annual interest rate of
8% compounded annually, how much must you
invest today?
o A) $6,805.83
o B) $7,138.96
, o C) $7,350.30
o D) $8,000.00
o Answer: A
o Rationale: Present Value = 10,000 / (1 +
0.08)^5 = $10,.469328 = $6,805.83.
Question 6: An annuity that provides cash flows
that continue forever is called a(n):
o A) Ordinary annuity.
o B) Annuity due.
o C) Amortized loan.
o D) Perpetuity.
o Answer: D
o Rationale: A perpetuity is an annuity in
which the cash flows continue
indefinitely.
Question 7: If a bond sells for more than its par
value, it is said to be selling at a:
o A) Discount.
o B) Premium.
o C) Par level.
o D) Yield.
FINANCE 11TH CANADIAN EDITION
COMPLETE MASTER TEST BANK
This comprehensive master test bank provides a high-yielding study
resource meticulously tailored to the core principles of corporate
finance. Every multiple-choice question features a clear, italicized
answer key and an in-depth, bolded rationale designed to reinforce
complex quantitative and qualitative concepts. Perfect for exam
preparation, this plug-and-play study guide helps students master
financial statement analysis, valuation, and capital budgeting to
maximize their course grades.
Question 1: Which of the following corporate
management positions is primarily responsible
for managing a firm's cash and credit, financial
planning, and capital expenditures?
o A) Controller
o B) Chief Executive Officer
o C) Treasurer
o D) Public Relations Manager
o Answer: C
o Rationale: The treasurer is directly
responsible for managing cash, credit,
financial planning, and capital
expenditures, whereas the controller
handles cost and financial accounting,
, tax payments, and management
information systems.
Question 2: The primary goal of financial
management in a publicly traded corporation is
to maximize the:
o A) Current dividends paid per share.
o B) Total book value of the firm's assets.
o C) Current value per share of the existing
stock.
o D) Total revenue of the firm.
o Answer: C
o Rationale: The primary goal of financial
management is to maximize the current
value per share of the existing stock,
aligning management's goals with the
wealth of the owners (shareholders).
Question 3: A conflict of interest between the
stockholders and management of a firm is
known as a(n):
o A) Agency problem.
o B) Liability issue.
o C) Capital budgeting conflict.
, o D) Partnership dilemma.
o Answer: A
o Rationale: An agency problem arises
when there is a conflict of interest
between the principal (stockholders) and
the agent (management).
Question 4: What is the future value of $5,000
invested for 3 years at an annual interest rate of
6%, compounded annually?
o A) $5,900.00
o B) $5,955.08
o C) $6,000.00
o D) $6,120.35
o Answer: B
o Rationale: Future Value = 5,000 * (1 +
0.06)^3 = $5,000 * 1.191016 = $5,955.08.
Question 5: You want to have $10,000 in 5
years. If you can earn an annual interest rate of
8% compounded annually, how much must you
invest today?
o A) $6,805.83
o B) $7,138.96
, o C) $7,350.30
o D) $8,000.00
o Answer: A
o Rationale: Present Value = 10,000 / (1 +
0.08)^5 = $10,.469328 = $6,805.83.
Question 6: An annuity that provides cash flows
that continue forever is called a(n):
o A) Ordinary annuity.
o B) Annuity due.
o C) Amortized loan.
o D) Perpetuity.
o Answer: D
o Rationale: A perpetuity is an annuity in
which the cash flows continue
indefinitely.
Question 7: If a bond sells for more than its par
value, it is said to be selling at a:
o A) Discount.
o B) Premium.
o C) Par level.
o D) Yield.
