Test Bank for
Fundamentals of Corporate Finance, 13th Edition Ross
Chapter 1-27 Answers are at the end of Each chapter
Chapter 1
Student name:__________
1) The controller, rather than the treasurer, is typically responsible for which one of the
following functions?
1) ______
A) Depositing cash receipts
B) Processing cost reports
C) Analyzing equipment purchases
D) Approving credit for a customer
E) Paying a vendor
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Management organization and roles
AACSB : Reflective Thinking
Bloom's : Remember
2) Usually, the treasurer of a corporation reports directly to the:
2) ______
Version 1 1
, A) board of directors.
B) chair of the board.
C) chief executive officer.
D) president.
E) vice president of finance.
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Management organization and roles
AACSB : Reflective Thinking
Bloom's : Remember
3) In a typical corporate organizational structure:
3) ______
A) the vice president of finance reports to the chair of the board.
B) the chief executive officer reports to the president.
C) the controller reports to the chief financial officer.
D) the treasurer reports to the president.
E) the chief operations officer reports to the vice president of production.
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Management organization and roles
AACSB : Reflective Thinking
Bloom's : Remember
Version 1 2
,4) Which one of the following questions involves a capital budgeting decision?
4) ______
A) How many shares of stock should the firm issue?
B) Should the firm purchase a new machine for the production line?
C) Should the firm borrow money to acquire new equipment?
D) How much inventory should the firm keep on hand?
E) How much money should be kept in the checking account?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
5) When evaluating the timing of a project’s projected cash flows, a financial manager is
analyzing:
5) ______
A) the amount of each expected cash flow.
B) only the start-up costs that are expected to require cash resources.
C) only the date of the final cash flow related to the project.
D) the amount by which cash receipts are expected to exceed cash outflows.
E) when each cash flow is expected to occur.
Version 1 3
,Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
6) Which one of the following questions involves a capital structure decision?
6) ______
A) Which one of two project proposals should the firm implement?
B) How should the firm allocate its limited available funds among acceptable projects?
C) How much funding should be allocated to financing customer purchases of a new
product?
D) How much debt should the firm incur to fund a project?
E) How much inventory will be needed to support a project?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
7) Determining the number of shares of stock to issue is an example of a ______ decision.
7) ______
Version 1 4
, A) capital rationing
B) net working capital
C) capital budgeting
D) capital allocation
E) capital structure
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
AACSB : Reflective Thinking
Bloom's : Remember
8) Which one of the following questions is a working capital management decision?
8) ______
A) Should the company issue new shares of stock or borrow money?
B) Should the company refurbish its equipment or replace it?
C) How much inventory should the company keep on hand?
D) Should the company close one of its current stores?
E) How much money should the company borrow to buy a new building?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
Version 1 5
,9) Which one of the following is a working capital management decision?
9) ______
A) What equipment will be required to complete a project?
B) Should the firm require immediate payment from customers or offer credit terms?
C) What amount of long-term debt is required to complete a project?
D) What percentage of the firm’s equity should the firm issue to fund an acquisition?
E) Which one of several acceptable projects should be implemented?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
10) Which one of the following involves a working capital management decision?
10) ______
A) What is the maximum level of cash to be kept in the firm’s bank account?
B) What is the most efficient process for producing a product?
C) How many hours of overtime should manufacturing employees be allowed to work?
D) When is the appropriate time to replace the delivery fleet?
E) Should a newly available parcel of land be acquired?
Version 1 6
,Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
11) Deciding which long-term investment a firm should make is a ______ decision.
11) ______
A) working capital management
B) capital constraints
C) cost of capital
D) capital budgeting
E) capital structure
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
AACSB : Reflective Thinking
Bloom's : Remember
12) A firm’s mixture of debt and equity financing is the result of its ______ decisions.
12) ______
Version 1 7
, A) working capital management
B) cash management
C) cost analysis
D) capital budgeting
E) capital structure
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
AACSB : Reflective Thinking
Bloom's : Remember
13) A firm’s ______ is the firm’s mix of short-term assets and short-term liabilities.
13) ______
A) net working capital
B) net debt
C) investment capital
D) net currency
E) capital structure
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
AACSB : Reflective Thinking
Bloom's : Remember
Version 1 8
,14) Which one of the following questions is least likely to be addressed by financial
managers?
14) ______
A) In which region of the country should a new product be launched?
B) Should customers be given 30 or 45 days to pay for their credit purchases?
C) Should the firm pay off its debt early?
D) Should the firm acquire new equipment?
E) How much cash should the firm keep on hand?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
15) A firm owned by a single person who has unlimited liability for the firm's debt is called
a:
15) ______
A) corporation.
B) sole proprietorship.
C) general partnership.
D) limited partnership.
E) limited liability company.
Version 1 9
, Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-03 Articulate the financial implications of the different forms of business o
Section : 1.2 Corporate Finance and the Financial Manager
Topic : Forms of business organization
AACSB : Reflective Thinking
Bloom's : Remember
16) A firm owned by two or more people who each have unlimited liability for all of the
firm's debts is called a:
16) ______
A) corporation.
B) sole proprietorship.
C) general partnership.
D) limited partnership.
E) limited liability company.
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-03 Articulate the financial implications of the different forms of business o
Section : 1.2 Corporate Finance and the Financial Manager
Topic : Forms of business organization
AACSB : Reflective Thinking
Bloom's : Remember
17) A partner in a firm knows that the maximum financial loss he or she will experience is
the amount he or she invested in the firm. The partner is called a ______ partner.
17) ______
Version 1 10
Fundamentals of Corporate Finance, 13th Edition Ross
Chapter 1-27 Answers are at the end of Each chapter
Chapter 1
Student name:__________
1) The controller, rather than the treasurer, is typically responsible for which one of the
following functions?
1) ______
A) Depositing cash receipts
B) Processing cost reports
C) Analyzing equipment purchases
D) Approving credit for a customer
E) Paying a vendor
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Management organization and roles
AACSB : Reflective Thinking
Bloom's : Remember
2) Usually, the treasurer of a corporation reports directly to the:
2) ______
Version 1 1
, A) board of directors.
B) chair of the board.
C) chief executive officer.
D) president.
E) vice president of finance.
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Management organization and roles
AACSB : Reflective Thinking
Bloom's : Remember
3) In a typical corporate organizational structure:
3) ______
A) the vice president of finance reports to the chair of the board.
B) the chief executive officer reports to the president.
C) the controller reports to the chief financial officer.
D) the treasurer reports to the president.
E) the chief operations officer reports to the vice president of production.
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Management organization and roles
AACSB : Reflective Thinking
Bloom's : Remember
Version 1 2
,4) Which one of the following questions involves a capital budgeting decision?
4) ______
A) How many shares of stock should the firm issue?
B) Should the firm purchase a new machine for the production line?
C) Should the firm borrow money to acquire new equipment?
D) How much inventory should the firm keep on hand?
E) How much money should be kept in the checking account?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
5) When evaluating the timing of a project’s projected cash flows, a financial manager is
analyzing:
5) ______
A) the amount of each expected cash flow.
B) only the start-up costs that are expected to require cash resources.
C) only the date of the final cash flow related to the project.
D) the amount by which cash receipts are expected to exceed cash outflows.
E) when each cash flow is expected to occur.
Version 1 3
,Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
6) Which one of the following questions involves a capital structure decision?
6) ______
A) Which one of two project proposals should the firm implement?
B) How should the firm allocate its limited available funds among acceptable projects?
C) How much funding should be allocated to financing customer purchases of a new
product?
D) How much debt should the firm incur to fund a project?
E) How much inventory will be needed to support a project?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
7) Determining the number of shares of stock to issue is an example of a ______ decision.
7) ______
Version 1 4
, A) capital rationing
B) net working capital
C) capital budgeting
D) capital allocation
E) capital structure
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
AACSB : Reflective Thinking
Bloom's : Remember
8) Which one of the following questions is a working capital management decision?
8) ______
A) Should the company issue new shares of stock or borrow money?
B) Should the company refurbish its equipment or replace it?
C) How much inventory should the company keep on hand?
D) Should the company close one of its current stores?
E) How much money should the company borrow to buy a new building?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
Version 1 5
,9) Which one of the following is a working capital management decision?
9) ______
A) What equipment will be required to complete a project?
B) Should the firm require immediate payment from customers or offer credit terms?
C) What amount of long-term debt is required to complete a project?
D) What percentage of the firm’s equity should the firm issue to fund an acquisition?
E) Which one of several acceptable projects should be implemented?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
10) Which one of the following involves a working capital management decision?
10) ______
A) What is the maximum level of cash to be kept in the firm’s bank account?
B) What is the most efficient process for producing a product?
C) How many hours of overtime should manufacturing employees be allowed to work?
D) When is the appropriate time to replace the delivery fleet?
E) Should a newly available parcel of land be acquired?
Version 1 6
,Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
11) Deciding which long-term investment a firm should make is a ______ decision.
11) ______
A) working capital management
B) capital constraints
C) cost of capital
D) capital budgeting
E) capital structure
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
AACSB : Reflective Thinking
Bloom's : Remember
12) A firm’s mixture of debt and equity financing is the result of its ______ decisions.
12) ______
Version 1 7
, A) working capital management
B) cash management
C) cost analysis
D) capital budgeting
E) capital structure
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
AACSB : Reflective Thinking
Bloom's : Remember
13) A firm’s ______ is the firm’s mix of short-term assets and short-term liabilities.
13) ______
A) net working capital
B) net debt
C) investment capital
D) net currency
E) capital structure
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
AACSB : Reflective Thinking
Bloom's : Remember
Version 1 8
,14) Which one of the following questions is least likely to be addressed by financial
managers?
14) ______
A) In which region of the country should a new product be launched?
B) Should customers be given 30 or 45 days to pay for their credit purchases?
C) Should the firm pay off its debt early?
D) Should the firm acquire new equipment?
E) How much cash should the firm keep on hand?
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Learning Objective : 01-01 Define the basic types of financial management decisions and the role of t
Section : 1.1 Finance: A Quick Look
Topic : Financial management decisions
Difficulty : 2 Intermediate
AACSB : Reflective Thinking
15) A firm owned by a single person who has unlimited liability for the firm's debt is called
a:
15) ______
A) corporation.
B) sole proprietorship.
C) general partnership.
D) limited partnership.
E) limited liability company.
Version 1 9
, Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-03 Articulate the financial implications of the different forms of business o
Section : 1.2 Corporate Finance and the Financial Manager
Topic : Forms of business organization
AACSB : Reflective Thinking
Bloom's : Remember
16) A firm owned by two or more people who each have unlimited liability for all of the
firm's debts is called a:
16) ______
A) corporation.
B) sole proprietorship.
C) general partnership.
D) limited partnership.
E) limited liability company.
Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 01-03 Articulate the financial implications of the different forms of business o
Section : 1.2 Corporate Finance and the Financial Manager
Topic : Forms of business organization
AACSB : Reflective Thinking
Bloom's : Remember
17) A partner in a firm knows that the maximum financial loss he or she will experience is
the amount he or she invested in the firm. The partner is called a ______ partner.
17) ______
Version 1 10
