Test Bank — Corporate Finance: Core Principles and Applications, 7th Edition — Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe & Bradford D. Jordan — ISBN 9781264413119 — Latest Update 2025/2026 — (All Chapters Covered 1–20)

Corporate Finance: Core
Principles and Applications
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7th Edition
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TEST BANK
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Stephen Ross
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Comprehensive Test Bank for Instructors
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and Students
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© Stephen Ross. All rights reserved. Reproduction or distribution without permission is

prohibited.
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, Test Bank – Corporate Finance: Core Principles and Applications (7th
Edition)

Authors: Stephen A. Ross, Randolph W. Westerfield, Jeffrey F. Jaffe, Bradford
D. Jordan
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ISBN: 9781264413119
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Part One: Overview
Chapter 1: Introduction to Corporate Finance
Chapter 2: Financial Statements and Cash Flow
Chapter 3: Financial Statements Analysis and Financial Models
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Part Two: Valuation and Capital Budgeting
Chapter 4: Discounted Cash Flow Valuation
Chapter 5: Interest Rates and Bond Valuation
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Chapter 6: Stock Valuation
Chapter 7: Net Present Value and Other Investment Rules
Chapter 8: Making Capital Investment Decisions
Chapter 9: Risk Analysis, Real Options, and Capital Budgeting
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Part Three: Risk and Return
Chapter 10: Risk and Return: Lessons from Market History
Chapter 11: Return and Risk: The Capital Asset Pricing Model (CAPM)
Chapter 12: Risk, Cost of Capital, and Valuation
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Part Four: Capital Structure and Dividend Policy
Chapter 13: Efficient Capital Markets and Behavioral Challenges
Chapter 14: Capital Structure: Basic Concepts
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Chapter 15: Capital Structure: Limits to the Use of Debt
Chapter 16: Dividends and Other Payouts

Part Five: Special Topics
Chapter 17: Options and Corporate Finance
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Chapter 18: Short-Term Finance and Planning
Chapter 19: Raising Capital
Chapter 20: International Corporate Finance
Chapter 21: Mergers and Acquisitions (Web Only)
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, Student name:__________
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
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1) Which one of the following items is an intangible asset?
A) A building
B) Accounts receivable
C) Inventory
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D) A loan from a creditor
E) A patent

2) Current assets include
A) inventory and cash.
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B) cash and buildings.
C) inventory and machinery.
D) equipment and cash.
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E) buildings and inventory.

3) Short-term finance
A) ensures sufficient equipment is available to produce the desired amount of product.
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B) ensures that long-term debt is acquired at the lowest possible cost.
C) ensures that dividends are paid to all stockholders on an annual basis.
D) balances the amount of company debt with the amount of available equity.
E) is concerned with managing net working capital.
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4) Which one of the following is a capital budgeting decision?
A) Deciding whether to build a new distribution center
B) Determining how quickly to pay their accounts payable
C) Determining whether to use short- or long-term liabilities
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D) Deciding how many shares of stock to repurchase
E) Determining how much cash to keep on hand

5) The managers in a firm have decided to move the company's headquarters from a rented
space to a new building that the company will purchase. This is an example of
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A) a net working capital decision.
B) a capital budgeting decision.
C) a short-term financing decision.
D) a capital structure decision.
E) a cash flow decision.
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, 6) Which one of the following actions involves a net working capital decision?
A) Deciding whether to build an apartment building
B) Negotiating whether to lease or buy a new store location
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C) Determining whether to issue debt or equity to pay for the firm's expansion
D) Deciding how much inventory to keep on hand
E) Determining whether to replace a fleet of vehicles
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7) The process of planning and managing a firm's long-term investments is referred to as
A) capital budgeting.
B) agency cost analysis.
C) financial depreciation.
D) working capital management.
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E) capital structure.

8) Capital structure decisions involve
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A) determining the ideal mix of current versus long-term assets.
B) deciding which fixed assets will be used to produce a tangible product.
C) determining the ideal mix of current assets and current liabilities.
D) choices related to acquiring or disposing of long-term assets.
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E) choices related to long-term debt and equity financing.

9) Net working capital is best defined as
A) excess cash on hand.
B) total current assets.
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C) current assets minus current liabilities.
D) total assets minus total liabilities.
E) cash and marketable securities.
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10) Both the treasurer and the controller of a corporation generally report to the
A) president.
B) board of directors.
C) chief executive officer.
D) chief financial officer.
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E) chairperson of the board.
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