TEST BANK
FundamentaIs of Corporate Finance, 13th Edition
by Stephen Ross Chapter 1-27
Version 1 1
,Answers are at the end of Each chapter
Chapter 1
Student name:
1) The controIIer, rather than the treasurer, is typicaIIy responsibIe for which one of the foIIowing
functions?
Depositing cash receipts
Processing cost reports
AnaIyzing equipment purchases
Approving credit for a customer
Paying a vendor
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : Management organization and roIes AACSB : RefIective Thinking
BIoom's : Remember
2) UsuaIIy, the treasurer of a corporation reports directIy to the:
Version 1 2
,board of directors.
chair of the board.
chief executive officer.
president.
vice president of finance.
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : Management organization and roIes AACSB : RefIective Thinking
BIoom's : Remember
3) In a typicaI corporate organizationaI structure:
the vice president of finance reports to the chair of the board.
the chief executive officer reports to the president.
the controIIer reports to the chief financiaI officer.
the treasurer reports to the president.
the chief operations officer reports to the vice president of production.
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : Management organization and roIes AACSB : RefIective Thinking
BIoom's : Remember
Version 1 3
,4) Which one of the foIIowing questions invoIves a capitaI budgeting decision?
How many shares of stock shouId the firm issue?
ShouId the firm purchase a new machine for the production Iine?
ShouId the firm borrow money to acquire new equipment?
How much inventory shouId the firm keep on hand?
How much money shouId be kept in the checking account?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
5) When evaIuating the timing of a project’s projected cash fIows, a financiaI manager is anaIyzing:
the amount of each expected cash fIow.
onIy the start-up costs that are expected to require cash resources.
onIy the date of the finaI cash fIow reIated to the project.
the amount by which cash receipts are expected to exceed cash outfIows.
when each cash fIow is expected to occur.
Version 1 4
,Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
6) Which one of the foIIowing questions invoIves a capitaI structure decision?
Which one of two project proposaIs shouId the firm impIement?
How shouId the firm aIIocate its Iimited avaiIabIe funds among acceptabIe projects?
How much funding shouId be aIIocated to financing customer purchases of a new product?
How much debt shouId the firm incur to fund a project?
How much inventory wiII be needed to support a project?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
7) Determining the number of shares of stock to issue is an exampIe of a decision.
Version 1 5
,capitaI rationing
net working capitaI
capitaI budgeting
capitaI aIIocation
capitaI structure
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions AACSB : RefIective Thinking
BIoom's : Remember
8) Which one of the foIIowing questions is a working capitaI management decision?
ShouId the company issue new shares of stock or borrow money?
ShouId the company refurbish its equipment or repIace it?
How much inventory shouId the company keep on hand?
ShouId the company cIose one of its current stores?
How much money shouId the company borrow to buy a new buiIding?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
Version 1 6
,9) Which one of the foIIowing is a working capitaI management decision?
What equipment wiII be required to compIete a project?
ShouId the firm require immediate payment from customers or offer credit terms?
What amount of Iong-term debt is required to compIete a project?
What percentage of the firm’s equity shouId the firm issue to fund an acquisition?
Which one of severaI acceptabIe projects shouId be impIemented?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
10) Which one of the foIIowing invoIves a working capitaI management decision?
What is the maximum IeveI of cash to be kept in the firm’s bank account?
What is the most efficient process for producing a product?
How many hours of overtime shouId manufacturing empIoyees be aIIowed to work?
When is the appropriate time to repIace the deIivery fIeet?
ShouId a newIy avaiIabIe parceI of Iand be acquired?
Version 1 7
,Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
11) Deciding which Iong-term investment a firm shouId make is a decision.
working capitaI management
capitaI constraints
cost of capitaI
capitaI budgeting
capitaI structure
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions AACSB : RefIective Thinking
BIoom's : Remember
12) A firm’s mixture of debt and equity financing is the resuIt of its decisions.
Version 1 8
,working capitaI management
cash management
cost anaIysis
capitaI budgeting
capitaI structure
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions AACSB : RefIective Thinking
BIoom's : Remember
A firm’s is the firm’s mix of short-term assets and short-term IiabiIities.
13)
net working capitaI
net debt
investment capitaI
net currency
capitaI structure
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions AACSB : RefIective Thinking
BIoom's : Remember
Version 1 9
, Which one of the foIIowing questions is Ieast IikeIy to be addressed by financiaI managers?
14)
In which region of the country shouId a new product be Iaunched?
ShouId customers be given 30 or 45 days to pay for their credit purchases?
ShouId the firm pay off its debt earIy?
ShouId the firm acquire new equipment?
How much cash shouId the firm keep on hand?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
A firm owned by a singIe person who has unIimited IiabiIity for the firm's debt is caIIed a:
15)
corporation.
soIe proprietorship.
generaI partnership.
Iimited partnership.
Iimited IiabiIity company.
Version 1 10
FundamentaIs of Corporate Finance, 13th Edition
by Stephen Ross Chapter 1-27
Version 1 1
,Answers are at the end of Each chapter
Chapter 1
Student name:
1) The controIIer, rather than the treasurer, is typicaIIy responsibIe for which one of the foIIowing
functions?
Depositing cash receipts
Processing cost reports
AnaIyzing equipment purchases
Approving credit for a customer
Paying a vendor
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : Management organization and roIes AACSB : RefIective Thinking
BIoom's : Remember
2) UsuaIIy, the treasurer of a corporation reports directIy to the:
Version 1 2
,board of directors.
chair of the board.
chief executive officer.
president.
vice president of finance.
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : Management organization and roIes AACSB : RefIective Thinking
BIoom's : Remember
3) In a typicaI corporate organizationaI structure:
the vice president of finance reports to the chair of the board.
the chief executive officer reports to the president.
the controIIer reports to the chief financiaI officer.
the treasurer reports to the president.
the chief operations officer reports to the vice president of production.
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : Management organization and roIes AACSB : RefIective Thinking
BIoom's : Remember
Version 1 3
,4) Which one of the foIIowing questions invoIves a capitaI budgeting decision?
How many shares of stock shouId the firm issue?
ShouId the firm purchase a new machine for the production Iine?
ShouId the firm borrow money to acquire new equipment?
How much inventory shouId the firm keep on hand?
How much money shouId be kept in the checking account?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
5) When evaIuating the timing of a project’s projected cash fIows, a financiaI manager is anaIyzing:
the amount of each expected cash fIow.
onIy the start-up costs that are expected to require cash resources.
onIy the date of the finaI cash fIow reIated to the project.
the amount by which cash receipts are expected to exceed cash outfIows.
when each cash fIow is expected to occur.
Version 1 4
,Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
6) Which one of the foIIowing questions invoIves a capitaI structure decision?
Which one of two project proposaIs shouId the firm impIement?
How shouId the firm aIIocate its Iimited avaiIabIe funds among acceptabIe projects?
How much funding shouId be aIIocated to financing customer purchases of a new product?
How much debt shouId the firm incur to fund a project?
How much inventory wiII be needed to support a project?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
7) Determining the number of shares of stock to issue is an exampIe of a decision.
Version 1 5
,capitaI rationing
net working capitaI
capitaI budgeting
capitaI aIIocation
capitaI structure
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions AACSB : RefIective Thinking
BIoom's : Remember
8) Which one of the foIIowing questions is a working capitaI management decision?
ShouId the company issue new shares of stock or borrow money?
ShouId the company refurbish its equipment or repIace it?
How much inventory shouId the company keep on hand?
ShouId the company cIose one of its current stores?
How much money shouId the company borrow to buy a new buiIding?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
Version 1 6
,9) Which one of the foIIowing is a working capitaI management decision?
What equipment wiII be required to compIete a project?
ShouId the firm require immediate payment from customers or offer credit terms?
What amount of Iong-term debt is required to compIete a project?
What percentage of the firm’s equity shouId the firm issue to fund an acquisition?
Which one of severaI acceptabIe projects shouId be impIemented?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
10) Which one of the foIIowing invoIves a working capitaI management decision?
What is the maximum IeveI of cash to be kept in the firm’s bank account?
What is the most efficient process for producing a product?
How many hours of overtime shouId manufacturing empIoyees be aIIowed to work?
When is the appropriate time to repIace the deIivery fIeet?
ShouId a newIy avaiIabIe parceI of Iand be acquired?
Version 1 7
,Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
11) Deciding which Iong-term investment a firm shouId make is a decision.
working capitaI management
capitaI constraints
cost of capitaI
capitaI budgeting
capitaI structure
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions AACSB : RefIective Thinking
BIoom's : Remember
12) A firm’s mixture of debt and equity financing is the resuIt of its decisions.
Version 1 8
,working capitaI management
cash management
cost anaIysis
capitaI budgeting
capitaI structure
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions AACSB : RefIective Thinking
BIoom's : Remember
A firm’s is the firm’s mix of short-term assets and short-term IiabiIities.
13)
net working capitaI
net debt
investment capitaI
net currency
capitaI structure
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe DifficuIty : 1 Basic
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions AACSB : RefIective Thinking
BIoom's : Remember
Version 1 9
, Which one of the foIIowing questions is Ieast IikeIy to be addressed by financiaI managers?
14)
In which region of the country shouId a new product be Iaunched?
ShouId customers be given 30 or 45 days to pay for their credit purchases?
ShouId the firm pay off its debt earIy?
ShouId the firm acquire new equipment?
How much cash shouId the firm keep on hand?
Question DetaiIs
AccessibiIity : Keyboard Navigation AccessibiIity : Screen Reader CompatibIe BIoom's : Understand
Iearning Objective : 01-01 Define the basic types of financiaI management decisions and the roIe of t Section : 1.1 Finance: A
Quick Iook
Topic : FinanciaI management decisions DifficuIty : 2 Intermediate
AACSB : RefIective Thinking
A firm owned by a singIe person who has unIimited IiabiIity for the firm's debt is caIIed a:
15)
corporation.
soIe proprietorship.
generaI partnership.
Iimited partnership.
Iimited IiabiIity company.
Version 1 10
