Created By: A Solut�on
Test Bank for Corporate F�nance, 6th Canad�an Ed�t�on
by
Jonathan Berk, Peter DeMarzo - Complete Chapters
Included (Chap 1 to 31) A+
Chapter 1 The Corporat�on and F�nanc�al Markets
1.1 The Three Types of F�rms
1) A sole propr�etorsh�p �s owned by:
A) one person.
B) two or more people.
C) shareholders.
D) bankers. Answer: A
D�ff: 1 Type: MC
Top�c : 1.1 The Three Types of F�rms
2) Wh�ch of the follow�ng organ�zat�on forms �s the most common �n the economy?
A) L�m�ted L�ab�l�ty Partnersh�p
B) L�m�ted Partnersh�p
C) Sole Propr�etorsh�p
D) Publ�cly Traded Corporat�on Answer: C
D�ff: 1 Type: MC
Top�c : 1.1 The Three Types of F�rms
3) Wh�ch of the follow�ng organ�zat�on forms earns the most revenue?
A) Pr�vately Owned Corporat�on
B) L�m�ted Partnersh�p
C) Publ�cly Owned Corporat�on
D) L�m�ted L�ab�l�ty Company Answer: C
,D�ff: 1 Type: MC
Top�c : 1.1 The Three Types of F�rms
A+ Page 1
,Created By: A Solut�on
4) Wh�ch of the follow�ng �s NOT an advantage of a sole propr�etorsh�p?
A) S�ngle taxat�on
B) Ease of setup
C) L�m�ted l�ab�l�ty
D) No separat�on of ownersh�p and control Answer: C
D�ff: 2 Type: MC
Top�c : 1.1 The Three Types of F�rms
5) Wh�ch of the follow�ng statements regard�ng l�m�ted partnersh�ps �s true?
A) There �s no l�m�t on a l�m�ted partner's l�ab�l�ty.
B) A l�m�ted partner's l�ab�l�ty �s l�m�ted by the amount of h�s �nvestment.
C) A l�m�ted partner �s not l�able unt�l all of the assets of the general partners have been
exhausted.
D) A general partner's l�ab�l�ty �s l�m�ted by the amount of h�s �nvestment. Answer:
B
D�ff: 2 Type: MC
Top�c : 1.1 The Three Types of F�rms
6) Wh�ch of the follow�ng are advantages of �ncorporat�on?
A) Access to cap�tal markets
B) L�m�ted l�ab�l�ty
C) Unl�m�ted l�fe
D) All of the above Answer: D
D�ff: 2 Type: MC
Top�c : 1.1 The Three Types of F�rms
7) In Canada, a l�m�ted l�ab�l�ty partnersh�p, LLP, �s essent�ally:
A) a l�m�ted partnersh�p w�thout l�m�ted partners.
B) a l�m�ted partnersh�p w�thout a general partner.
C) just another name for a l�m�ted partnersh�p.
, D) just another name for a corporat�on. Answer: B
A+ Page 2
Test Bank for Corporate F�nance, 6th Canad�an Ed�t�on
by
Jonathan Berk, Peter DeMarzo - Complete Chapters
Included (Chap 1 to 31) A+
Chapter 1 The Corporat�on and F�nanc�al Markets
1.1 The Three Types of F�rms
1) A sole propr�etorsh�p �s owned by:
A) one person.
B) two or more people.
C) shareholders.
D) bankers. Answer: A
D�ff: 1 Type: MC
Top�c : 1.1 The Three Types of F�rms
2) Wh�ch of the follow�ng organ�zat�on forms �s the most common �n the economy?
A) L�m�ted L�ab�l�ty Partnersh�p
B) L�m�ted Partnersh�p
C) Sole Propr�etorsh�p
D) Publ�cly Traded Corporat�on Answer: C
D�ff: 1 Type: MC
Top�c : 1.1 The Three Types of F�rms
3) Wh�ch of the follow�ng organ�zat�on forms earns the most revenue?
A) Pr�vately Owned Corporat�on
B) L�m�ted Partnersh�p
C) Publ�cly Owned Corporat�on
D) L�m�ted L�ab�l�ty Company Answer: C
,D�ff: 1 Type: MC
Top�c : 1.1 The Three Types of F�rms
A+ Page 1
,Created By: A Solut�on
4) Wh�ch of the follow�ng �s NOT an advantage of a sole propr�etorsh�p?
A) S�ngle taxat�on
B) Ease of setup
C) L�m�ted l�ab�l�ty
D) No separat�on of ownersh�p and control Answer: C
D�ff: 2 Type: MC
Top�c : 1.1 The Three Types of F�rms
5) Wh�ch of the follow�ng statements regard�ng l�m�ted partnersh�ps �s true?
A) There �s no l�m�t on a l�m�ted partner's l�ab�l�ty.
B) A l�m�ted partner's l�ab�l�ty �s l�m�ted by the amount of h�s �nvestment.
C) A l�m�ted partner �s not l�able unt�l all of the assets of the general partners have been
exhausted.
D) A general partner's l�ab�l�ty �s l�m�ted by the amount of h�s �nvestment. Answer:
B
D�ff: 2 Type: MC
Top�c : 1.1 The Three Types of F�rms
6) Wh�ch of the follow�ng are advantages of �ncorporat�on?
A) Access to cap�tal markets
B) L�m�ted l�ab�l�ty
C) Unl�m�ted l�fe
D) All of the above Answer: D
D�ff: 2 Type: MC
Top�c : 1.1 The Three Types of F�rms
7) In Canada, a l�m�ted l�ab�l�ty partnersh�p, LLP, �s essent�ally:
A) a l�m�ted partnersh�p w�thout l�m�ted partners.
B) a l�m�ted partnersh�p w�thout a general partner.
C) just another name for a l�m�ted partnersh�p.
, D) just another name for a corporat�on. Answer: B
A+ Page 2
