Corporate Finance
Test Bank (Download Only), 5e
By Michael J. Woodworth
Corporate Finance
Fifth Edition
@
W
IS
Jonathan Berk
ED
Peter DeMarzo
O
C
S@
20
25
!
,This work is protected by United States copyright laws and is provided
solely for the use of instructors in teaching their courses and assessing
student learning. Dissemination or sale of any part of this work (including
on the World Wide Web) will destroy the integrity of the work and is not
permitted. The work and materials from it should never be made available
to students except by instructors using the accompanying text in their
classes. All recipients of this work are expected to abide by these
restrictions and to honor the intended pedagogical purposes and the needs
of other instructors who rely on these materials.
Director, Higher Education Product Management: Business & Economics: Adrienne
D’Ambrosio
Editorial Assistant: Catherine Cinque
Content Producers: Meredith Gertz and Sudipto Roy
Copyright © 2020 by Pearson Education, Inc. or its affiliates. All Rights Reserved. Manufactured
in the United States of America. This publication is protected by copyright, and permission
should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval
system, or transmission in any form or by any means, electronic, mechanical, photocopying,
@
recording, or otherwise. For information regarding permissions, request forms, and the
appropriate contacts within the Pearson Education Global Rights and Permissions department,
please visit www.pearsoned.com/permissions/.
W
PEARSON, ALWAYS LEARNING, and MYLAB are exclusive trademarks owned by Pearson
Education, Inc. or its affiliates in the U.S. and/or other countries.
IS
Unless otherwise indicated herein, any third-party trademarks, logos, or icons that may appear in
this work are the property of their respective owners, and any references to third-party
ED
trademarks, logos, icons, or other trade dress are for demonstrative or descriptive purposes only.
Such references are not intended to imply any sponsorship, endorsement, authorization, or
promotion of Pearson’s products by the owners of such marks, or any relationship between the
owner and Pearson Education, Inc., or its affiliates, authors, licensees, or distributors.
O
C
ISBN-13: 978-0-13-499836-7
ISBN-10: 0-13-499836-7
S@
20
25
!
,Corporate Finance, 5e (Berk/DeMarzo)
Chapter 1 The Corporation
1.1 The Four Types of Firms
1) A sole proprietorship is owned by:
A) one person.
B) two or more persons.
C) shareholders.
D) bankers.
Answer: A
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Definition
2) Which of the following organization forms for a business does NOT avoid double taxation?
A) Limited partnership
B) "C" corporation
C) "S" corporation
D) Limited liability company
Answer: B
Diff: 1
Section: 1.1 The Four Types of Firms
@
Skill: Conceptual
3) Which of the following organization forms accounts for the most revenue?
W
A) "S" corporation
B) Limited partnership
C) "C" corporation
IS
D) Limited liability company
Answer: C
Diff: 1
ED
Section: 1.1 The Four Types of Firms
Skill: Conceptual
4) Which of the following organization forms accounts for the greatest number of firms?
O
A) "S" corporation
B) Limited partnership
C) Sole proprietorship
C
D) "C" corporation
Answer: C
S@
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual
20
25
1
Copyright © 2020 Pearson Education, Inc.
!
, 5) 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 control
Answer: C
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual
6) 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 their investment.
C) A limited partner is not liable until all the assets of the general partners have been exhausted.
D) A general partner's liability is limited by the amount of their investment.
Answer: B
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual
7) Which of the following is/are an advantage of incorporation?
A) Access to capital markets
B) Limited liability
C) Unlimited life
@
D) All of the above
Answer: D
Diff: 2
W
Section: 1.1 The Four Types of Firms
Skill: Conceptual
IS
8) Which of the following statements is most correct?
A) An advantage to incorporation is that it allows for less regulation of the business.
B) An advantage of a corporation is that it is subject to double taxation.
ED
C) Unlike a partnership, a disadvantage of a corporation is that it has limited liability.
D) Corporations face more regulations when compared to partnerships.
Answer: D
Diff: 2
O
Section: 1.1 The Four Types of Firms
Skill: Conceptual
C
9) A limited liability company is essentially:
A) a limited partnership without limited partners.
S@
B) a limited partnership without a general partner.
C) just another name for a limited partnership with a general partner.
D) just another name for a corporation.
Answer: B
Diff: 1
20
Section: 1.1 The Four Types of Firms
Skill: Conceptual
25
2
Copyright © 2020 Pearson Education, Inc.
!
Test Bank (Download Only), 5e
By Michael J. Woodworth
Corporate Finance
Fifth Edition
@
W
IS
Jonathan Berk
ED
Peter DeMarzo
O
C
S@
20
25
!
,This work is protected by United States copyright laws and is provided
solely for the use of instructors in teaching their courses and assessing
student learning. Dissemination or sale of any part of this work (including
on the World Wide Web) will destroy the integrity of the work and is not
permitted. The work and materials from it should never be made available
to students except by instructors using the accompanying text in their
classes. All recipients of this work are expected to abide by these
restrictions and to honor the intended pedagogical purposes and the needs
of other instructors who rely on these materials.
Director, Higher Education Product Management: Business & Economics: Adrienne
D’Ambrosio
Editorial Assistant: Catherine Cinque
Content Producers: Meredith Gertz and Sudipto Roy
Copyright © 2020 by Pearson Education, Inc. or its affiliates. All Rights Reserved. Manufactured
in the United States of America. This publication is protected by copyright, and permission
should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval
system, or transmission in any form or by any means, electronic, mechanical, photocopying,
@
recording, or otherwise. For information regarding permissions, request forms, and the
appropriate contacts within the Pearson Education Global Rights and Permissions department,
please visit www.pearsoned.com/permissions/.
W
PEARSON, ALWAYS LEARNING, and MYLAB are exclusive trademarks owned by Pearson
Education, Inc. or its affiliates in the U.S. and/or other countries.
IS
Unless otherwise indicated herein, any third-party trademarks, logos, or icons that may appear in
this work are the property of their respective owners, and any references to third-party
ED
trademarks, logos, icons, or other trade dress are for demonstrative or descriptive purposes only.
Such references are not intended to imply any sponsorship, endorsement, authorization, or
promotion of Pearson’s products by the owners of such marks, or any relationship between the
owner and Pearson Education, Inc., or its affiliates, authors, licensees, or distributors.
O
C
ISBN-13: 978-0-13-499836-7
ISBN-10: 0-13-499836-7
S@
20
25
!
,Corporate Finance, 5e (Berk/DeMarzo)
Chapter 1 The Corporation
1.1 The Four Types of Firms
1) A sole proprietorship is owned by:
A) one person.
B) two or more persons.
C) shareholders.
D) bankers.
Answer: A
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Definition
2) Which of the following organization forms for a business does NOT avoid double taxation?
A) Limited partnership
B) "C" corporation
C) "S" corporation
D) Limited liability company
Answer: B
Diff: 1
Section: 1.1 The Four Types of Firms
@
Skill: Conceptual
3) Which of the following organization forms accounts for the most revenue?
W
A) "S" corporation
B) Limited partnership
C) "C" corporation
IS
D) Limited liability company
Answer: C
Diff: 1
ED
Section: 1.1 The Four Types of Firms
Skill: Conceptual
4) Which of the following organization forms accounts for the greatest number of firms?
O
A) "S" corporation
B) Limited partnership
C) Sole proprietorship
C
D) "C" corporation
Answer: C
S@
Diff: 1
Section: 1.1 The Four Types of Firms
Skill: Conceptual
20
25
1
Copyright © 2020 Pearson Education, Inc.
!
, 5) 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 control
Answer: C
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual
6) 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 their investment.
C) A limited partner is not liable until all the assets of the general partners have been exhausted.
D) A general partner's liability is limited by the amount of their investment.
Answer: B
Diff: 2
Section: 1.1 The Four Types of Firms
Skill: Conceptual
7) Which of the following is/are an advantage of incorporation?
A) Access to capital markets
B) Limited liability
C) Unlimited life
@
D) All of the above
Answer: D
Diff: 2
W
Section: 1.1 The Four Types of Firms
Skill: Conceptual
IS
8) Which of the following statements is most correct?
A) An advantage to incorporation is that it allows for less regulation of the business.
B) An advantage of a corporation is that it is subject to double taxation.
ED
C) Unlike a partnership, a disadvantage of a corporation is that it has limited liability.
D) Corporations face more regulations when compared to partnerships.
Answer: D
Diff: 2
O
Section: 1.1 The Four Types of Firms
Skill: Conceptual
C
9) A limited liability company is essentially:
A) a limited partnership without limited partners.
S@
B) a limited partnership without a general partner.
C) just another name for a limited partnership with a general partner.
D) just another name for a corporation.
Answer: B
Diff: 1
20
Section: 1.1 The Four Types of Firms
Skill: Conceptual
25
2
Copyright © 2020 Pearson Education, Inc.
!
