TEST BANK
Essentials of Financial Management, 5th Edition
By Eugene F. Brigham, Joel F. Houston
SC
O
R
EG
U
ID
ES
, Table of Content
PART I. Introduction to Financial Management.
1 An Overview of Financial Management.
2 Financial Markets and Institutions.
PART II. Fundamental Concepts in Financial Management and Financial Forecasting.
3 Financial Statements, Cash Flow, and Taxes.
4 Analysis of Financial Statements.
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5 Time Value of Money.
6 Financial Planning and Forecasting.
PART III. Financial Assets.
7 Interest Rates.
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8 Risk and Rates of Return.
9 Bonds and Their Valuation.
10 Stocks and Their Valuation.
R
PART IV. Investing in Long-Term Assets: Capital Budgeting.
11 The Cost of Capital.
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12 The Basics of Capital Budgeting.
13 Cash Flow Estimation and Risk Analysis.
14 Real Options and Other Topics in Capital Budgeting.
PART V. Capital Structure, Dividend Policy, and Working Capital Management.
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15 Capital Structure and Leverage.
16 Distributions to Shareholders: Dividends and Share Repurchases.
17 Working Capital Management. PART VI Special Topics in Financial Management.
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18 Derivatives and Risk Management.
19 Multinational Financial Management.
20 Hybrid Financing: Preferred Stock, Leasing, Warrants, and Convertibles.
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21 Mergers and Acquisitions.
,Chapter 1. An Overview of Financial Management.
Note that there is an overlap between the T/F and multiple-choice questions, as some of the T/F statements are used in
multiple-choice questions.
Multiple Choice: True/False
1. In most corporations, the CFO ranks under the CEO.
a. True
b. False
SC
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
TOPICS: Role of finance
O
KEYWORDS: Bloom's Knowledge
2. The Chairman of the Board must also be the CEO.
a. True
R
b. False
ANSWER: False
POINTS: 1
EG
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
TOPICS: Role of finance
KEYWORDS: Bloom's: Knowledge
U
3. The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking
individual. The CEO generally works under the board and its chairman, and the board generally has the authority to
remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to
have the board voted out and a new board voted in should a conflict arise. It is possible for a person to simultaneously
ID
serve as CEO and chairman of the board, though many corporate control experts believe it is bad to vest both offices in
the same person.
a. True
b. False
ES
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
TOPICS: Role of finance
KEYWORDS: Bloom's: Knowledge
, Chapter 1. An Overview of Financial Management.
4. Partnerships and proprietorships generally have a tax advantage over corporations.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
SC
QUESTION TYPE: True / False
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
5. A disadvantage of the corporate form of organization is that corporate stockholders are more exposed to personal
liabilities in the event of bankruptcy than are investors in a typical partnership.
O
a. True
b. False
ANSWER: False
POINTS: 1
R
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
EG
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
6. An advantage of the corporate form of organization is that corporations are generally less highly regulated than
proprietorships and partnerships.
a. True
U
b. False
ANSWER: False
POINTS: 1
ID
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
TOPICS: Forms of organization
ES
KEYWORDS: Bloom's: Knowledge
7. Some partners in a partnership may have different rights, privileges, and responsibilities than other partners.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
Essentials of Financial Management, 5th Edition
By Eugene F. Brigham, Joel F. Houston
SC
O
R
EG
U
ID
ES
, Table of Content
PART I. Introduction to Financial Management.
1 An Overview of Financial Management.
2 Financial Markets and Institutions.
PART II. Fundamental Concepts in Financial Management and Financial Forecasting.
3 Financial Statements, Cash Flow, and Taxes.
4 Analysis of Financial Statements.
SC
5 Time Value of Money.
6 Financial Planning and Forecasting.
PART III. Financial Assets.
7 Interest Rates.
O
8 Risk and Rates of Return.
9 Bonds and Their Valuation.
10 Stocks and Their Valuation.
R
PART IV. Investing in Long-Term Assets: Capital Budgeting.
11 The Cost of Capital.
EG
12 The Basics of Capital Budgeting.
13 Cash Flow Estimation and Risk Analysis.
14 Real Options and Other Topics in Capital Budgeting.
PART V. Capital Structure, Dividend Policy, and Working Capital Management.
U
15 Capital Structure and Leverage.
16 Distributions to Shareholders: Dividends and Share Repurchases.
17 Working Capital Management. PART VI Special Topics in Financial Management.
ID
18 Derivatives and Risk Management.
19 Multinational Financial Management.
20 Hybrid Financing: Preferred Stock, Leasing, Warrants, and Convertibles.
ES
21 Mergers and Acquisitions.
,Chapter 1. An Overview of Financial Management.
Note that there is an overlap between the T/F and multiple-choice questions, as some of the T/F statements are used in
multiple-choice questions.
Multiple Choice: True/False
1. In most corporations, the CFO ranks under the CEO.
a. True
b. False
SC
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
TOPICS: Role of finance
O
KEYWORDS: Bloom's Knowledge
2. The Chairman of the Board must also be the CEO.
a. True
R
b. False
ANSWER: False
POINTS: 1
EG
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
TOPICS: Role of finance
KEYWORDS: Bloom's: Knowledge
U
3. The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking
individual. The CEO generally works under the board and its chairman, and the board generally has the authority to
remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to
have the board voted out and a new board voted in should a conflict arise. It is possible for a person to simultaneously
ID
serve as CEO and chairman of the board, though many corporate control experts believe it is bad to vest both offices in
the same person.
a. True
b. False
ES
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
QUESTION TYPE: True / False
TOPICS: Role of finance
KEYWORDS: Bloom's: Knowledge
, Chapter 1. An Overview of Financial Management.
4. Partnerships and proprietorships generally have a tax advantage over corporations.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
SC
QUESTION TYPE: True / False
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
5. A disadvantage of the corporate form of organization is that corporate stockholders are more exposed to personal
liabilities in the event of bankruptcy than are investors in a typical partnership.
O
a. True
b. False
ANSWER: False
POINTS: 1
R
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
EG
TOPICS: Forms of organization
KEYWORDS: Bloom's: Knowledge
6. An advantage of the corporate form of organization is that corporations are generally less highly regulated than
proprietorships and partnerships.
a. True
U
b. False
ANSWER: False
POINTS: 1
ID
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
QUESTION TYPE: True / False
TOPICS: Forms of organization
ES
KEYWORDS: Bloom's: Knowledge
7. Some partners in a partnership may have different rights, privileges, and responsibilities than other partners.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
