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 & Gillan.
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ISBN 9781119795438
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Chapter 1-21 m




1

,Chapter 1 m 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 the
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firm's owners.
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Answer: TRUE m




Diff: 1
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Learning Objective: LO 1 m m m




Bloomcode: Knowledge
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AACSB: Analytic
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IMA: FSA m m




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




Learning Objective: LO 1 m m m




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 flows.
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Answer: FALSE
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Diff: 2 m




Learning Objective: LO 1 m m m




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 m




Learning Objective: LO 1 m m m




Bloomcode: Knowledge
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AACSB: Analytic
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IMA: FSA m m




AICPA: Process and Resource Management Perspectives
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2

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




Learning Objective: LO 1 m m m




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




Learning Objective: LO 1 m m m




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 to the
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firm than the cost of the project.
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Answer: TRUE m m




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




Learning Objective: LO 1 m m m




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




Learning Objective: LO 1 m m m




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 total
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liabilities.
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Answer: FALSE m




Diff: 1
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Learning Objective: LO 1 m m m




Bloomcode: Knowledge
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AACSB: Analytic
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IMA: Budget Preparation
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3

, AICPA: Process and Resource Management Perspectives
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4