TEST BANK
TEST BANK
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,Principles of Corporate Finance, 13e (Brealey)
Chapter 1 Introduction to Corporate Finance
1) This book is mainly about:
A) financial decisions made by corporations.
B) financial decisions made by households.
C) financial decisions made by governments.
D) financial decisions made by employees.
Answer: A
Difficulty: 1 Easy
Topic: Financing Activities
Learning Objective: 01-02 The Financial Goal of the Corporation
Bloom's: Apply
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
2) Shareholders of a corporation may be, among others,
A) individuals.
B) individuals and pension funds.
C) pension funds.
D) individuals, pension funds, and insurance companies.
Answer: D
Difficulty: 1 Easy
Topic: Shareholder Voting
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
3) Generally, a corporation is owned by its
A) managers.
B) board of directors and shareholders.
C) shareholders.
D) managers, board of directors, and shareholders.
Answer: C
Difficulty: 1 Easy
Topic: Shareholder Voting
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) A corporation, potentially, has infinite life because it
A) is a legal entity.
B) has the same ownership and management.
C) has limited liability.
D) is closely regulated.
Answer: A
Difficulty: 1 Easy
Topic: Forms of business organization
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
5) Limited liability is an important feature of:
A) sole proprietorships.
B) partnerships.
C) corporations.
D) both partnerships and corporations.
Answer: C
Difficulty: 1 Easy
Topic: Forms of business organization
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
6) As a legal entity, a corporation can perform the following functions EXCEPT:
A) borrow money and lend money.
B) borrow money, lend money, and sue and be sued.
C) vote.
D) borrow money, lend money, sue and be sued, and vote.
Answer: C
Difficulty: 1 Easy
Topic: Forms of business organization
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 7) Which of the following assets is tangible?
A) ExxonMobil's corporate headquarters building
B) Apple Inc.'s trademark
C) Hewlett-Packard's most recent printer patent
D) Microsoft's technical expertise
Answer: A
Difficulty: 1 Easy
Topic: Real vs Financial Assets
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
8) Which of the following types of assets are intangible?
A) production machinery
B) factories
C) trademarks
D) office equipment
Answer: C
Difficulty: 1 Easy
Topic: Real vs Financial Assets
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
9) A firm's investment decision is also called its
A) financing decision.
B) liquidity decision.
C) capital budgeting decision.
D) leasing decision.
Answer: C
Difficulty: 1 Easy
Topic: Investment vs Financing Decision
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
4
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
TEST BANK
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,Principles of Corporate Finance, 13e (Brealey)
Chapter 1 Introduction to Corporate Finance
1) This book is mainly about:
A) financial decisions made by corporations.
B) financial decisions made by households.
C) financial decisions made by governments.
D) financial decisions made by employees.
Answer: A
Difficulty: 1 Easy
Topic: Financing Activities
Learning Objective: 01-02 The Financial Goal of the Corporation
Bloom's: Apply
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
2) Shareholders of a corporation may be, among others,
A) individuals.
B) individuals and pension funds.
C) pension funds.
D) individuals, pension funds, and insurance companies.
Answer: D
Difficulty: 1 Easy
Topic: Shareholder Voting
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
3) Generally, a corporation is owned by its
A) managers.
B) board of directors and shareholders.
C) shareholders.
D) managers, board of directors, and shareholders.
Answer: C
Difficulty: 1 Easy
Topic: Shareholder Voting
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) A corporation, potentially, has infinite life because it
A) is a legal entity.
B) has the same ownership and management.
C) has limited liability.
D) is closely regulated.
Answer: A
Difficulty: 1 Easy
Topic: Forms of business organization
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
5) Limited liability is an important feature of:
A) sole proprietorships.
B) partnerships.
C) corporations.
D) both partnerships and corporations.
Answer: C
Difficulty: 1 Easy
Topic: Forms of business organization
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
6) As a legal entity, a corporation can perform the following functions EXCEPT:
A) borrow money and lend money.
B) borrow money, lend money, and sue and be sued.
C) vote.
D) borrow money, lend money, sue and be sued, and vote.
Answer: C
Difficulty: 1 Easy
Topic: Forms of business organization
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 7) Which of the following assets is tangible?
A) ExxonMobil's corporate headquarters building
B) Apple Inc.'s trademark
C) Hewlett-Packard's most recent printer patent
D) Microsoft's technical expertise
Answer: A
Difficulty: 1 Easy
Topic: Real vs Financial Assets
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
8) Which of the following types of assets are intangible?
A) production machinery
B) factories
C) trademarks
D) office equipment
Answer: C
Difficulty: 1 Easy
Topic: Real vs Financial Assets
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
9) A firm's investment decision is also called its
A) financing decision.
B) liquidity decision.
C) capital budgeting decision.
D) leasing decision.
Answer: C
Difficulty: 1 Easy
Topic: Investment vs Financing Decision
Learning Objective: 01-01 Corporate Investment and Financing Decisions
Bloom's: Remember
AACSB: Analytic Thinking
Accessibility: Keyboard Navigation
4
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
