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Testbank Fundamentals of Financial Management, 14e Brigham TB

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Testbank Fundamentals of Financial Management, 14e Brigham TB CHAPTER 01—AN OVERVIEW OF FINANCIAL MANAGEMENT CHAPTER 02—FINANCIAL MARKETS AND INSTITUTIONS CHAPTER 03—FINANCIAL STATEMENTS, CASH FLOW, AND TAXES CHAPTER 04—ANALYSIS OF FINANCIAL STATEMENTS CHAPTER 05—TIME VALUE OF MONEY CHAPTER06----INTEREST RATES CHAPTER 07 - BONDS AND THEIR VALUATION CHAPTER_08 RISK AND RATES OF RETURN CHAPTER_09 STOCKS AND THEIR VALUATION CHAPTER_10 THE COST OF CAPITAL CHAPTER_11 THE BASICS OF CAPITAL BUDGETING CHAPTER_12 CASH FLOW ESTIMATION AND RISK ANALYSIS CHAPTER_13 REAL OPTIONS AND OTHER TOPICS IN CAPITAL BUDGETING CHAPTER_14 CAPITAL STRUCTURE AND LEVERAGE CHAPTER_15 DISTRIBUTIONS TO SHAREHOLDERS DIVIDENDS AND SHARE REPURCHASES CHAPTER_16 WORKING CAPITAL MANAGEMENT CHAPTER_17 FINANCIAL PLANNING AND FORECASTING CHAPTER_18 DERIVATIVES AND RISK MANAGEMENT CHAPTER_19 MULTINATIONAL FINANCIAL MANAGEMENT CHAPTER_20 HYBRID FINANCING PREFERRED STOCK LEASING WARRANTS AND CONVERTIBLES CHAPTER_21 MERGERS AND ACQUISITIONS WEB_APPENDIX 05A CONTINUOUS COMPOUNDING AND DISCOUNTING WEB APPENDIX 07A ZERO COUPON BONDS WEB APPENDIX 07C BANKRUPTCY AND REORGANIZATION WEB APPENDIX 08A CALCULATING BETA COEFFICIENTS WEB APPENDIX 12C USING THE CAPM TO ESTIMATE THE RISK ADJUSTED COST OF CAPITAL WEB APPENDIX 12D TECHNIQUES FOR MEASURING BETA RISK WEB APPENDIX 14A DEGREE OF LEVERAGE

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TestBank
Fundamentals
of Financial
Management,
14e Brigham TB

,CHAPTER 01—AN OVERVIEW OF FINANCIAL MANAGEMENT
Note that there is an overlap between the T/F and multiple-choice questions, as some of the T/F statements are used in
multiple-choice questions.

Multiple Choice: True/False


1. In most corporations, the CFO ranks under the CEO.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
LEARNING OBJECTIVES: FOFM.BRIG.16.01.01 - What Is Finance?
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Role of finance
KEYWORDS: Bloom’s: Knowledge

2. The Chairman of the Board must also be the CEO.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
LEARNING OBJECTIVES: FOFM.BRIG.16.01.01 - What Is Finance?
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Role of finance
KEYWORDS: Bloom’s: Knowledge

3. The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking
individual. The CEO generally works under the board and its chairman, and the board generally has the authority to
remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to
have the board voted out and a new board voted in should a conflict arise. It is possible for a person to simultaneously
serve as CEO and chairman of the board, though many corporate control experts believe it is bad to vest both offices in
the same person.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-1 What Is Finance?
LEARNING OBJECTIVES: FOFM.BRIG.16.01.01 - What Is Finance?
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
Cengage Learning Testing, Powered by Cognero Page 1

,CHAPTER 01—AN OVERVIEW OF FINANCIAL MANAGEMENT
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Role of finance
KEYWORDS: Bloom’s: Knowledge

4. Partnerships and proprietorships generally have a tax advantage over corporations.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge

5. A disadvantage of the corporate form of organization is that corporate stockholders are more exposed to personal
liabilities in the event of bankruptcy than are investors in a typical partnership.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge

6. An advantage of the corporate form of organization is that corporations are generally less highly regulated than
proprietorships and partnerships.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge

Cengage Learning Testing, Powered by Cognero Page 2

, CHAPTER 01—AN OVERVIEW OF FINANCIAL MANAGEMENT
7. Some partners in a partnership may have different rights, privileges, and responsibilities than other partners.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge

8. One advantage of the corporate form of organization is that it avoids double taxation.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge

9. It is generally harder to transfer one's ownership interest in a partnership than in a corporation.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: EASY
REFERENCES: 1-3 Forms of Business Organization
LEARNING OBJECTIVES: FOFM.BRIG.16.01.03 - Forms of Business Organization
NATIONAL STANDARDS: United States - BUSPROG.FOFM.BRIG.16.06 - Reflective thinking
STATE STANDARDS: United States - OH - DISC.FOFM.BRIG.16.06 - Finance function
TOPICS: Forms of organization
KEYWORDS: Bloom’s: Knowledge

10. One danger of starting a proprietorship is that you may be exposed to personal liability if the business goes bankrupt.
This problem would be avoided if you formed a corporation to operate the business.
a. True
b. False
ANSWER: True

Cengage Learning Testing, Powered by Cognero Page 3

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