TEST BANK Corporate Finance, Canadian Edition, 6th Edition by Jonathan Berk, Peter DeMarzo, All Chapters 1 - 31

TEST BANK
Corporate Finance, Canadian Edition, 6th Edition
by Jonathan Berk, Peter DeMarzo, All Chapters 1 - 31

,TABLE OF CONTENTS

1. The Corporation and Financial Markets
2. Introduction to Financial Statement Analysis
3. Financial Decision Making and the Law of One Price
4. The Time Value of Money
5. Interest Rates
6. Valuing Bonds
7. Investment Decision Rules
8. Fundamentals of Capital Budgeting
9. Valuing Stocks
10. Capital Markets and the Pricing of Risk
11. Optimal Portfolio Choice and the Capital Asset Pricing Model
12. Estimating the Cost of Capital
13. Investor Behavior and Capital Market Efficiency
14. Capital Structure in a Perfect Market
15. Debt and Taxes
16. Financial Distress, Managerial Incentives, and Information
17. Payout Policy
18. Capital Budgeting and Valuation with Leverage
19. Valuation and Financial Modeling: A Case Study
20. Financial Options
21. Option Valuation
22. Real Options
23. Raising Equity Capital
24. Debt Financing
25. Leasing
26. Working Capital Management
27. Short-Term Financial Planning
28. Mergers and Acquisitions
29. Corporate Governance
30. Risk Management
31. International Corporate Finance

,1. The Corporation and Financial Markets

1.1 The Three Types of Firms

1) A sole proprietorship is owned by:
A) one person
B) two or more people
C) shareholders
D) banker
s
ANSWER
A

Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms

2) In Canada, which of the following organization forms accounts for the greatest
number offirms?
A) Limited Liability Partnership
B) Limited Partnership
C) Sole Proprietorship
D) Publicly Traded
CorporationANSWER: C
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms

3) Which of the following organization forms earns the most revenue?
A) Privately Owned Corporation
B) Limited Partnership
C) Publicly Owned Corporation
D) Limited Liability
CompanyANSWER: C
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms

4) Which of the following is NOT an advantage of a sole proprietorship?
A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and
controlANSWER: C

, Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms
5) Which of the following statements regarding limited partnerships is TRUE?
A) There is no limit on a limited partner's liability.
B) A limited partner's liability is limited by the amount of his investment.
C) A limited partner is not liable until all of the assets of the general partners
have beenexhausted.
D) A general partner's liability is limited by the amount of his
investment.ANSWER: B
Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms

6) Which of the following is/are an advantage(s) of incorporation?
A) Access to capital markets
B) Limited liability
C) Unlimited life
D) All of the
aboveANSWER:
D
Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms

7) In Canada, fa flimited fliability fpartnership, fLLP, fis fessentially:
A) a flimited fpartnership fwithout flimited fpartners
B) a flimited fpartnership fwithout fa fgeneral fpartner
C) just fanother fname ffor fa flimited fpartnership
D) just fanother fname ffor fa
fcorporationfANSWER: fB
Diff: f1 Type: fMC
Topic: f 1.1 f The fThree fTypes fof fFirms

8) In fCanada, fwhich fof fthe ffollowing fbusiness forganization fforms fcannot favoid fdouble
ftaxation?
A) Limited fPartnership
B) Publicly fTraded fCorporation
C) Privately fOwned fCorporation
D) Limited fLiability
fCompanyfANSWER: fB
Diff: f1 Type: fMC
Topic: f 1.1 f The fThree fTypes fof fFirms

9) In fCanada, fthe fdividend ftax fcredit fgives fsome frelief fby:
A) effectively fgiving fa flower ftax frate fon fdividend fincome fthan fon fother fsources fof
fincome