Test Bank for Corporate Finance 13th Edition by
Stephen Ross, Randolph Westerfield, Jeffrey Jaffe,
Bradford Jordan All Chapters Complete
,Chapter 01 Introduction to Corporate Finance Answer Key
Multiple Choice Questions
1. Which one of the following terms is defined as the management of a firm's long-
term investments?
A. working capital management
B. financial allocation
C. agency cost analysis
D. capital budgeting
E. capital
structure Refer to
section 1.1
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
Topic: Capital budgeting
2. Which one of the following terms is defined as the mixture of a firm's debt and
equity financing?
A. working capital management
B. cash management
C. cost analysis
D. capital budgeting
E. capital
structure Refer to
section 1.1
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
Topic: Capital structure
,3. Which one of the following is defined as a firm's short-term assets and its short-
term liabilities?
A. working capital
B. debt
C. investment capital
D. net capital
E. capital
structure Refer to
section 1.1
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
Topic: Working capital
4. A business owned by a solitary individual who has unlimited liability for its debt is
called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. limited liability company.
Refer to section 1.2
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
Topic: Sole proprietorship
, 5. A business formed by two or more individuals who each have unlimited liability for
all of the firm's business debts is called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. limited liability company.
Refer to section 1.2
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
Topic: General partnership
6. A business partner whose potential financial loss in the partnership will not exceed
his or her investment in that partnership is called a:
A. generally partner.
B. sole proprietor.
C. limited partner.
D. corporate shareholder.
E. zero partner.
Refer to section 1.2
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
Topic: Limited partner
Stephen Ross, Randolph Westerfield, Jeffrey Jaffe,
Bradford Jordan All Chapters Complete
,Chapter 01 Introduction to Corporate Finance Answer Key
Multiple Choice Questions
1. Which one of the following terms is defined as the management of a firm's long-
term investments?
A. working capital management
B. financial allocation
C. agency cost analysis
D. capital budgeting
E. capital
structure Refer to
section 1.1
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
Topic: Capital budgeting
2. Which one of the following terms is defined as the mixture of a firm's debt and
equity financing?
A. working capital management
B. cash management
C. cost analysis
D. capital budgeting
E. capital
structure Refer to
section 1.1
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
Topic: Capital structure
,3. Which one of the following is defined as a firm's short-term assets and its short-
term liabilities?
A. working capital
B. debt
C. investment capital
D. net capital
E. capital
structure Refer to
section 1.1
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
Topic: Working capital
4. A business owned by a solitary individual who has unlimited liability for its debt is
called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. limited liability company.
Refer to section 1.2
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
Topic: Sole proprietorship
, 5. A business formed by two or more individuals who each have unlimited liability for
all of the firm's business debts is called a:
A. corporation.
B. sole proprietorship.
C. general partnership.
D. limited partnership.
E. limited liability company.
Refer to section 1.2
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
Topic: General partnership
6. A business partner whose potential financial loss in the partnership will not exceed
his or her investment in that partnership is called a:
A. generally partner.
B. sole proprietor.
C. limited partner.
D. corporate shareholder.
E. zero partner.
Refer to section 1.2
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
Topic: Limited partner
