TEST BANK
Corporate Finance
Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe, Bradford D. Jordan
13th Edition
Chapters 1-31
PR
O
FD
O
C
,@PROFDOCDIGITALLIBRARIES
Chapter 01: Introduction to Corporate Finance
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
PR
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
O
Topic: Capital budgeting
2. Which one of the following terms is defined as the mixture of a firm's debt and equity
FD
financing?
A. working capital management
B. cash management
C. cost analysis
D. capital budgeting
E. capital structure
O
Refer to section 1.1
C
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
Topic: Capital structure
1-1
,@PROFDOCDIGITALLIBRARIES
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
PR
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.
O
B. sole proprietorship.
C. general partnership.
D. limited partnership.
FD
E. limited liability company.
Refer to section 1.2
O
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
C
Topic: Sole proprietorship
1-2
, @PROFDOCDIGITALLIBRARIES
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
PR
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.
O
B. sole proprietor.
C. limited partner.
D. corporate shareholder.
FD
E. zero partner.
Refer to section 1.2
O
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
C
Topic: Limited partner
1-3
Corporate Finance
Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe, Bradford D. Jordan
13th Edition
Chapters 1-31
PR
O
FD
O
C
,@PROFDOCDIGITALLIBRARIES
Chapter 01: Introduction to Corporate Finance
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
PR
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
O
Topic: Capital budgeting
2. Which one of the following terms is defined as the mixture of a firm's debt and equity
FD
financing?
A. working capital management
B. cash management
C. cost analysis
D. capital budgeting
E. capital structure
O
Refer to section 1.1
C
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-1
Section: 1.1
Topic: Capital structure
1-1
,@PROFDOCDIGITALLIBRARIES
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
PR
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.
O
B. sole proprietorship.
C. general partnership.
D. limited partnership.
FD
E. limited liability company.
Refer to section 1.2
O
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
C
Topic: Sole proprietorship
1-2
, @PROFDOCDIGITALLIBRARIES
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
PR
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.
O
B. sole proprietor.
C. limited partner.
D. corporate shareholder.
FD
E. zero partner.
Refer to section 1.2
O
AACSB: N/A
Difficulty: Basic
Learning Objective: 1-3
Section: 1.2
C
Topic: Limited partner
1-3
