,Essentials of Corporate Finance Edition 11 Ross
CORRECT ANSWERS ARE LOCATED IN THE 2ND HALF OF THIS DOC.
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Nishaa has been promoted and is now in charge of all external financing. In other words, she
is in charge of:
A) capital structure management.
B) asset allocation.
C) risk management.
D) capital budgeting.
E) working capital management.
2) Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt
and equity is referred to as the firm's:
A) capital structure.
B) capital budget.
C) asset allocation.
D) working capital.
E) risk structure.
3) Raleigh BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions
related to these accounts are referred to as:
A) capital structure decisions.
B) capital budgeting decisions.
C) working capital management.
D) operating management.
E) fixed account structure.
4) Vera opened a used bookstore and is both the 100 percent owner and the store's manager.
Which type of business entity does Vera own if she is personally liable for all the store's
debts?
A) Sole proprietorship
B) Limited partnership
C) Corporation
D) Joint stock company
E) General partnership
Version 1 1
,Essentials of Corporate Finance Edition 11 Ross
5) Deandre and Mason both enjoy sunshine, water, and surfboards. Thus, the two friends
decided to create a business together renting surfboards, paddle boats, and inflatable devices
in California. Deandre and Mason will equally share in the decision making and in the
business profits or losses. Which type of business did they create if they both have full
personal liability for the firm's debts?
A) Sole proprietorship
B) Limited partnership
C) Corporation
D) Joint stock company
E) General partnership
6) Jordan and Carmen created a firm that is a separate legal entity and will share ownership of
that firm on a 75/25 basis. Which type of entity did they create if they have no personal
liability for the firm's debts?
A) Limited partnership
B) Corporation
C) Sole proprietorship
D) General partnership
E) Public company
7) The potential conflict of interest between a firm's owners and its managers is referred to as
which type of conflict?
A) Organizational
B) Structural
C) Formative
D) Agency
E) Territorial
8) An employee has a claim on the cash flows of Westlake Machines. This claim is defined as a
claim by one of the firm's:
A) residual owners.
B) shareholders.
C) financiers.
D) provisional partners.
E) stakeholders.
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, Essentials of Corporate Finance Edition 11 Ross
9) The shareholders of Qiang’s Markets would benefit if the firm were to be acquired by Better
Foods. However, Weil’s board of directors rejects the acquisition offer. This is an example
of:
A) a corporate takeover.
B) a capital structure issue.
C) a working capital decision.
D) an agency conflict.
E) a compensation issue.
10) When conducting a financial analysis of a firm, financial analysts:
A) cannot use accounting information as it is historical.
B) rely solely on accounting information.
C) frequently use accounting information.
D) ignore accounting information but do use marketing information.
E) assume the future will be a repeat of the past as reflected in the firm’s accounting
reports.
11) Silvia is employed as a currency trader in the Japanese yen market. Her job falls into which
one of the following areas of finance?
A) International finance
B) Financial institutions
C) Corporate finance
D) Capital management
E) Personal finance
12) If you accept a job as a domestic security analyst for a brokerage firm, you are most likely
working in which one of the following financial areas?
A) International finance
B) Private placements
C) Corporate finance
D) Capital management
E) Investments
13) Which one of the following occupations best fits into the corporate area of finance?
A) Mortgage broker
B) Treasury bill analyst
C) Chief financial officer
D) Insurance risk manager
E) Local bank manager
Essentials of Corporate Finance Edition 11 Ross
14) Which one of the following functions is generally a responsibility assigned to the corporate
treasurer?
Version 1 3
CORRECT ANSWERS ARE LOCATED IN THE 2ND HALF OF THIS DOC.
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Nishaa has been promoted and is now in charge of all external financing. In other words, she
is in charge of:
A) capital structure management.
B) asset allocation.
C) risk management.
D) capital budgeting.
E) working capital management.
2) Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt
and equity is referred to as the firm's:
A) capital structure.
B) capital budget.
C) asset allocation.
D) working capital.
E) risk structure.
3) Raleigh BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions
related to these accounts are referred to as:
A) capital structure decisions.
B) capital budgeting decisions.
C) working capital management.
D) operating management.
E) fixed account structure.
4) Vera opened a used bookstore and is both the 100 percent owner and the store's manager.
Which type of business entity does Vera own if she is personally liable for all the store's
debts?
A) Sole proprietorship
B) Limited partnership
C) Corporation
D) Joint stock company
E) General partnership
Version 1 1
,Essentials of Corporate Finance Edition 11 Ross
5) Deandre and Mason both enjoy sunshine, water, and surfboards. Thus, the two friends
decided to create a business together renting surfboards, paddle boats, and inflatable devices
in California. Deandre and Mason will equally share in the decision making and in the
business profits or losses. Which type of business did they create if they both have full
personal liability for the firm's debts?
A) Sole proprietorship
B) Limited partnership
C) Corporation
D) Joint stock company
E) General partnership
6) Jordan and Carmen created a firm that is a separate legal entity and will share ownership of
that firm on a 75/25 basis. Which type of entity did they create if they have no personal
liability for the firm's debts?
A) Limited partnership
B) Corporation
C) Sole proprietorship
D) General partnership
E) Public company
7) The potential conflict of interest between a firm's owners and its managers is referred to as
which type of conflict?
A) Organizational
B) Structural
C) Formative
D) Agency
E) Territorial
8) An employee has a claim on the cash flows of Westlake Machines. This claim is defined as a
claim by one of the firm's:
A) residual owners.
B) shareholders.
C) financiers.
D) provisional partners.
E) stakeholders.
Version 1 2
, Essentials of Corporate Finance Edition 11 Ross
9) The shareholders of Qiang’s Markets would benefit if the firm were to be acquired by Better
Foods. However, Weil’s board of directors rejects the acquisition offer. This is an example
of:
A) a corporate takeover.
B) a capital structure issue.
C) a working capital decision.
D) an agency conflict.
E) a compensation issue.
10) When conducting a financial analysis of a firm, financial analysts:
A) cannot use accounting information as it is historical.
B) rely solely on accounting information.
C) frequently use accounting information.
D) ignore accounting information but do use marketing information.
E) assume the future will be a repeat of the past as reflected in the firm’s accounting
reports.
11) Silvia is employed as a currency trader in the Japanese yen market. Her job falls into which
one of the following areas of finance?
A) International finance
B) Financial institutions
C) Corporate finance
D) Capital management
E) Personal finance
12) If you accept a job as a domestic security analyst for a brokerage firm, you are most likely
working in which one of the following financial areas?
A) International finance
B) Private placements
C) Corporate finance
D) Capital management
E) Investments
13) Which one of the following occupations best fits into the corporate area of finance?
A) Mortgage broker
B) Treasury bill analyst
C) Chief financial officer
D) Insurance risk manager
E) Local bank manager
Essentials of Corporate Finance Edition 11 Ross
14) Which one of the following functions is generally a responsibility assigned to the corporate
treasurer?
Version 1 3
