Test bank
Fundamentals of corporate finance,
By stephen a. Ross
11c edition
2
,Table of contents
part 1 overview of corporate finance
1. Introduction to corporate finance
2. Financial statements, cash flow, and taxes
Part 2 financial statements and long-term financial planning
3. Working with financial statements
4. Long-term financial planning and corporate growth
appendix 4a: a financial planning model for the hoffman company (available on connect) appendix 4b:
derivation of the sustainable growth formula (available on connect)
Part 3 valuation of future cash flows
5. Introduction to valuation: the time value of money
6. Discounted cash flow valuation
7. Interest rates and bond valuation appendix 7a: managing interest rate risk appendix 7b: callable bonds and
bond refunding (available on connect)
8. Stock valuation
Part 4 capital budgeting
9. Net present value and other investment criteria appendix 9a: the modified internal rate of return
10. Making capital investment decisions
appendix 10a: more on inflation and capital budgeting
appendix 10b: capital budgeting with spreadsheets
appendix 10c: deriving the tax shield on cca formula
11. Project analysis and evaluation
Part 5 risk and return
12. Lessons from capital market history
13. Return, risk, and the security market line appendix 13a: derivation of the capital asset pricing model
Part 6 cost of capital and long-term financial policy
14. Cost of capital appendix 14a: adjusted present value appendix 14b: economic value added and the
measurement of financial perfomance
15. Raising capital
16. Financial leverage and capital structure policy
appendix 16a: capital structure and personal taxes
appendix 16b: derivation of proposition ii (equation 16.4)
17. Dividends and dividend policy
Part 7 short-term financial planning and management
18. Short-term finance and planning
19. Cash and liquidity management
3
,appendix 19a: cash management models (available on connect)
20. Credit and inventory management appendix 20a: more on credit policy analysis (available on connect)
Part 8 topics in corporate finance
21. International corporate finance
22. Leasing
23. Mergers and acquisitions
Part 9 derivative securities and corporate finance
24. Enterprise risk management
25. Options and corporate securities
26. Behavioural finance: implications for financial management
4
, Chapter 1. Introduction to corporate finance
Multiple choice. Choose the one alternative that best completes the statement or answers
the question.
1) Which one of the following actions is the best example of an agency problem? 1)
A) Paying management bonuses based on the number of store locations
opened during the year.
B) Basing management bonuses on the attainment of specific financial goals.
C)Accepting a project that enhances both management salaries and the
market value of the firm's stock.
D) Requiring stockholders approval of all management compensation decisions.
E) Paying management bonuses based on the current market value of the firm's stock.
Answer: a
explanation: a)
B)
C)
D)
E)
2) Which one of the following best describes the primary advantage of being a limited 2)
Partner rather than a general partner?
A) Entitlement to a larger portion of the partnership's income.
B) Liability for firm debts limited to the capital invested.
C) Greater management responsibility.
D) Ability to manage the day-to-day affairs of the business.
E) No potential financial loss.
Answer: b
Explanation: a)
b)
C)
D)
E)
3) Which of the following accounts does not relate to working capital management 3)
Decisions?
A) Short-term debt.
5
Fundamentals of corporate finance,
By stephen a. Ross
11c edition
2
,Table of contents
part 1 overview of corporate finance
1. Introduction to corporate finance
2. Financial statements, cash flow, and taxes
Part 2 financial statements and long-term financial planning
3. Working with financial statements
4. Long-term financial planning and corporate growth
appendix 4a: a financial planning model for the hoffman company (available on connect) appendix 4b:
derivation of the sustainable growth formula (available on connect)
Part 3 valuation of future cash flows
5. Introduction to valuation: the time value of money
6. Discounted cash flow valuation
7. Interest rates and bond valuation appendix 7a: managing interest rate risk appendix 7b: callable bonds and
bond refunding (available on connect)
8. Stock valuation
Part 4 capital budgeting
9. Net present value and other investment criteria appendix 9a: the modified internal rate of return
10. Making capital investment decisions
appendix 10a: more on inflation and capital budgeting
appendix 10b: capital budgeting with spreadsheets
appendix 10c: deriving the tax shield on cca formula
11. Project analysis and evaluation
Part 5 risk and return
12. Lessons from capital market history
13. Return, risk, and the security market line appendix 13a: derivation of the capital asset pricing model
Part 6 cost of capital and long-term financial policy
14. Cost of capital appendix 14a: adjusted present value appendix 14b: economic value added and the
measurement of financial perfomance
15. Raising capital
16. Financial leverage and capital structure policy
appendix 16a: capital structure and personal taxes
appendix 16b: derivation of proposition ii (equation 16.4)
17. Dividends and dividend policy
Part 7 short-term financial planning and management
18. Short-term finance and planning
19. Cash and liquidity management
3
,appendix 19a: cash management models (available on connect)
20. Credit and inventory management appendix 20a: more on credit policy analysis (available on connect)
Part 8 topics in corporate finance
21. International corporate finance
22. Leasing
23. Mergers and acquisitions
Part 9 derivative securities and corporate finance
24. Enterprise risk management
25. Options and corporate securities
26. Behavioural finance: implications for financial management
4
, Chapter 1. Introduction to corporate finance
Multiple choice. Choose the one alternative that best completes the statement or answers
the question.
1) Which one of the following actions is the best example of an agency problem? 1)
A) Paying management bonuses based on the number of store locations
opened during the year.
B) Basing management bonuses on the attainment of specific financial goals.
C)Accepting a project that enhances both management salaries and the
market value of the firm's stock.
D) Requiring stockholders approval of all management compensation decisions.
E) Paying management bonuses based on the current market value of the firm's stock.
Answer: a
explanation: a)
B)
C)
D)
E)
2) Which one of the following best describes the primary advantage of being a limited 2)
Partner rather than a general partner?
A) Entitlement to a larger portion of the partnership's income.
B) Liability for firm debts limited to the capital invested.
C) Greater management responsibility.
D) Ability to manage the day-to-day affairs of the business.
E) No potential financial loss.
Answer: b
Explanation: a)
b)
C)
D)
E)
3) Which of the following accounts does not relate to working capital management 3)
Decisions?
A) Short-term debt.
5
