FULL 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
,TABLE OF CONTENTS
CHAPTER 1: THE FINANCIAL MANAGER AND THE FIRM ........................................................................... 3
CHAPTER 2: THE FINANCIAL SYSTEM AND THE LEVEL OF INTEREST RATES ........................................... 38
CHAPTER 3: THE FINANCIAL SYSTEM AND THE LEVEL OF INTEREST RATES ........................................... 65
CHAPTER 4: ANALYSING FINANCIAL STATEMENTS ............................................................................... 107
CHAPTER 5: THE TIME VALUE OF MONEY ............................................................................................ 155
CHAPTER 6: DISCOUNTED CASH FLOWS AND VALUATION................................................................... 218
CHAPTER 07: RISK AND RETURN ........................................................................................................... 279
CHAPTER 8: BOND VALUATION AND THE STRUCTURE OF INTEREST RATES ........................................ 327
CHAPTER 9: STOCK VALUATION ............................................................................................................ 385
CHAPTER 10: THE FUNDAMENTALS OF CAPITAL BUDGETING.............................................................. 445
CHAPTER 11: CASH FLOWS AND CAPITAL BUDGETING ........................................................................ 502
CHAPTER 12: EVALUATING PROJECT ECONOMICS ............................................................................... 555
CHAPTER 13: THE COST OF CAPITAL ..................................................................................................... 607
CHAPTER 14: WORKING CAPITAL MANAGEMENT ................................................................................ 655
CHAPTER 15 HOW FIRMS RAISE CAPITAL ............................................................................................. 699
CHAPTER: 16 CAPITAL STRUCTURE POLICY........................................................................................... 746
CHAPTER 17: DIVIDENDS, STOCK REPURCHASES, AND PAYOUT POLICY .............................................. 798
CHAPTER 18: BUSINESS FORMATION, GROWTH, AND VALUATION ..................................................... 848
CHAPTER 19: FINANCIAL PLANNING AND MANAGING GROWTH ........................................................ 895
CHAPTER 20: OPTIONS AND CORPORATE FINANCE ................................................................................. 947
CHAPTER 21: INTERNATIONAL FINANCIAL MANAGEMENT ................................................................ 1011
,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
ANSWER 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
ANSWER 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
ANSWER B
FORMAT: TRUE/FALSE LEARNING OBJECTIVE: LO 1 LEVEL OF DIFFICULTY: EASY BLOOMCODE:
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
ANSWER 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
ANSWER B
FORMAT: TRUE/FALSE LEARNING OBJECTIVE: LO 1 LEVEL OF DIFFICULTY: EASY BLOOMCODE:
KNOWLEDGE
AACSB: ANALYTIC
,IMA: CORPORATE FINANCE AICPA: RESOURCE MANAGEMENT
6. CAPITAL ASSETS ARE GENERALLY SHORT TERM IN NATURE.
A) TRUE
B) FALSE
ANSWER 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
ANSWER 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
ANSWER 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
ANSWER 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
ANSWER 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
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
,TABLE OF CONTENTS
CHAPTER 1: THE FINANCIAL MANAGER AND THE FIRM ........................................................................... 3
CHAPTER 2: THE FINANCIAL SYSTEM AND THE LEVEL OF INTEREST RATES ........................................... 38
CHAPTER 3: THE FINANCIAL SYSTEM AND THE LEVEL OF INTEREST RATES ........................................... 65
CHAPTER 4: ANALYSING FINANCIAL STATEMENTS ............................................................................... 107
CHAPTER 5: THE TIME VALUE OF MONEY ............................................................................................ 155
CHAPTER 6: DISCOUNTED CASH FLOWS AND VALUATION................................................................... 218
CHAPTER 07: RISK AND RETURN ........................................................................................................... 279
CHAPTER 8: BOND VALUATION AND THE STRUCTURE OF INTEREST RATES ........................................ 327
CHAPTER 9: STOCK VALUATION ............................................................................................................ 385
CHAPTER 10: THE FUNDAMENTALS OF CAPITAL BUDGETING.............................................................. 445
CHAPTER 11: CASH FLOWS AND CAPITAL BUDGETING ........................................................................ 502
CHAPTER 12: EVALUATING PROJECT ECONOMICS ............................................................................... 555
CHAPTER 13: THE COST OF CAPITAL ..................................................................................................... 607
CHAPTER 14: WORKING CAPITAL MANAGEMENT ................................................................................ 655
CHAPTER 15 HOW FIRMS RAISE CAPITAL ............................................................................................. 699
CHAPTER: 16 CAPITAL STRUCTURE POLICY........................................................................................... 746
CHAPTER 17: DIVIDENDS, STOCK REPURCHASES, AND PAYOUT POLICY .............................................. 798
CHAPTER 18: BUSINESS FORMATION, GROWTH, AND VALUATION ..................................................... 848
CHAPTER 19: FINANCIAL PLANNING AND MANAGING GROWTH ........................................................ 895
CHAPTER 20: OPTIONS AND CORPORATE FINANCE ................................................................................. 947
CHAPTER 21: INTERNATIONAL FINANCIAL MANAGEMENT ................................................................ 1011
,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
ANSWER 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
ANSWER 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
ANSWER B
FORMAT: TRUE/FALSE LEARNING OBJECTIVE: LO 1 LEVEL OF DIFFICULTY: EASY BLOOMCODE:
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
ANSWER 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
ANSWER B
FORMAT: TRUE/FALSE LEARNING OBJECTIVE: LO 1 LEVEL OF DIFFICULTY: EASY BLOOMCODE:
KNOWLEDGE
AACSB: ANALYTIC
,IMA: CORPORATE FINANCE AICPA: RESOURCE MANAGEMENT
6. CAPITAL ASSETS ARE GENERALLY SHORT TERM IN NATURE.
A) TRUE
B) FALSE
ANSWER 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
ANSWER 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
ANSWER 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
ANSWER 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
ANSWER 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
