Test Bank – Fundamentals of Corporate Finance, 5th Edition (European EMEA) by David Hillier, Ross

Fundamentals of Corporate Finance 5th Edition European EMEA David Hillier
Answers Included
Chap 01 5e - Hillier
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Which one of the following functions should be the responsibility of the controller rather
than the treasurer?
1) ______
A) Daily cash deposit
B) Income tax returns
C) Equipment purchase analysis
D) Customer credit approval

Question Details
Bloom's : Understand
Difficulty : Easy
Learning Objective : LO1 The basic types of financial management decisions, and the role of the finan
Topic : Corporate Finance and the Financial Manager
Source : Chapter 01 Testbank > question #1



2) The controller of a corporation generally reports directly to the:
2) ______
A) board of directors.
B) chairman of the board.
C) chief executive officer.
D) president
E) chief financial officer.

Question Details
Bloom's : Understand
Difficulty : Easy
Learning Objective : LO1 The basic types of financial management decisions, and the role of the finan
Topic : Corporate Finance and the Financial Manager
Source : Chapter 01 Testbank > question #2




1

,3) Which one of the following correctly defines the upward chain of command in a typical
corporate organizational structure?
3) ______
A) The chief financial officer reports to the chairman of the board.
B) The chairman reports to the chief executive officer.
C) The controller reports to the chairman.
D) The treasurer reports to the chief financial officer.
E) The chief operating officer reports to the non-executive directors.

Question Details
Bloom's : Understand
Difficulty : Easy
Learning Objective : LO1 The basic types of financial management decisions, and the role of the finan
Topic : Corporate Finance and the Financial Manager
Source : Chapter 01 Testbank > question #3



4) Which one of the following is a capital budgeting decision?
4) ______
A) Determining how many shares of equity to issue
B) Deciding whether or not to purchase a new machine for the production line
C) Deciding how to refinance a debt issue that is maturing
D) Determining how much money should be kept in the checking account
E) Determining how much inventory to keep on hand.

Question Details
Bloom's : Evaluate
Difficulty : Easy
Learning Objective : LO1 The basic types of financial management decisions, and the role of the finan
Topic : Corporate Finance and the Financial Manager
Source : Chapter 01 Testbank > question #4




2

,5) Which one of the following is a capital structure decision?
5) ______
A) Determining which one of two projects to accept
B) Determining how to allocate investment funds to multiple projects
C) Determining the amount of funds needed to finance customer purchases of a new
product
D) Determining how much debt should be assumed to fund a project
E) Determining how much inventory to keep on hand.

Question Details
Bloom's : Evaluate
Difficulty : Easy
Learning Objective : LO1 The basic types of financial management decisions, and the role of the finan
Topic : Corporate Finance and the Financial Manager
Source : Chapter 01 Testbank > question #5



6) The decision to issue additional shares of equity is an example of which one of the
following?
6) ______
A) Working capital management
B) Net working capital decision
C) Capital budgeting
D) Controller's duties
E) Capital structure decision

Question Details
Bloom's : Evaluate
Difficulty : Easy
Learning Objective : LO1 The basic types of financial management decisions, and the role of the finan
Topic : Corporate Finance and the Financial Manager
Source : Chapter 01 Testbank > question #6




3

, 7) Which one of the following is a working capital management decision?
7) ______
A) Determining the amount of equipment needed to complete a job
B) Determining whether to pay cash for a purchase or use the credit offered by the
supplier
C) Determining the amount of long-term debt required to complete a project
D) Determining the number of shares to issue to fund an acquisition
E) Determining whether or not a project should be accepted

Question Details
Bloom's : Evaluate
Difficulty : Easy
Learning Objective : LO1 The basic types of financial management decisions, and the role of the finan
Topic : Corporate Finance and the Financial Manager
Source : Chapter 01 Testbank > question #7



8) Why should financial managers strive to maximize the current share price?
8) ______
A) Doing so guarantees the company will grow in size at the maximum possible rate
B) Doing so increases employee salaries
C) Because they have been hired to represent the interests of the current shareholders
D) Because this will increase the current dividends per share
E) Because managers often receive shares of equity as part of their compensation

Question Details
Bloom's : Evaluate
Difficulty : Intermediate
Learning Objective : LO2 The goal of financial management
Topic : The Goal of Financial Management
Source : Chapter 01 Testbank > question #8




4