TEST BANK
Corporate Finance,
Jonathan Berk
5th Canadian Edition
PR
O
FD
O
C
,Table of Contents
1. The Corporation and Financial Markets
2. Introduction to Financial Statement Analysis
3. Arbitrage and Financial Decision Making
4. The Time Value of Money
5. Interest Rates
6. Valuing Bonds
7. Valuing Stocks
8. Investment Decision Rules
9. Fundamentals of Capital Budgeting
PR
10. Capital Markets and the Pricing of Risk
11. Optimal Portfolio Choice and the Capital Asset Pricing Model
12. Estimating the Cost of Capital
13. Investor Behaviour and Capital Market Efficiency
O
14. Financial Options
15. Option Valuation
FD
16. Real Options
17. Capital Structure in a Perfect Market
18. Debt and Taxes
19. Financial Distress, Managerial Incentives, and Information
O
20. Payout Policy
21. Capital Budgeting and Valuation with Leverage
C
22. Valuation and Financial Modeling: A Case Study
23. Raising Equity Capital
24. Debt Financing
25. Leasing
26. Working Capital Management
27. Short-Term Financial Planning
28. Mergers and Acquisitions
29. Corporate Governance
30. Risk Management
31. International Corporate Finance
,Chapter 1 The Corporation
1.1 The Three Types of Firms
1) A sole proprietorship is owned by:
A) one person
B) two or more people
C) shareholders
D) bankers
Answer: A
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms
2) In Canada, which of the following organization forms accounts for the greatest number of
firms?
PR
A) Limited Liability Partnership
B) Limited Partnership
C) Sole Proprietorship
D) Publicly Traded Corporation
Answer: C
Diff: 1 Type: MC
O
Topic: 1.1 The Three Types of Firms
3) Which of the following organization forms earns the most revenue?
FD
A) Privately Owned Corporation
B) Limited Partnership
C) Publicly Owned Corporation
D) Limited Liability Company
Answer: C
Diff: 1 Type: MC
O
Topic: 1.1 The Three Types of Firms
4) Which of the following is NOT an advantage of a sole proprietorship?
C
A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and control
Answer: C
Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms
, 5) Which of the following statements regarding limited partnerships is TRUE?
A) There is no limit on a limited partner's liability.
B) A limited partner's liability is limited by the amount of his investment.
C) A limited partner is not liable until all of the assets of the general partners have been
exhausted.
D) A general partner's liability is limited by the amount of his investment.
Answer: B
Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms
6) Which of the following is/are an advantage(s) of incorporation?
A) Access to capital markets
B) Limited liability
C) Unlimited life
D) All of the above
PR
Answer: D
Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms
7) In Canada, a limited liability partnership, LLP, is essentially:
A) a limited partnership without limited partners
O
B) a limited partnership without a general partner
C) just another name for a limited partnership
D) just another name for a corporation
FD
Answer: B
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms
8) In Canada, which of the following business organization forms cannot avoid double taxation?
A) Limited Partnership
O
B) Publicly Traded Corporation
C) Privately Owned Corporation
D) Limited Liability Company
C
Answer: B
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms
9) In Canada, the dividend tax credit gives some relief by:
A) effectively giving a lower tax rate on dividend income than on other sources of income
B) effectively giving a higher tax rate on dividend income than on other sources of income
C) effectively giving the same tax rate on dividend income as on other sources of income
D) effectively giving a tax rate of zero on dividend income compared to other sources of income
Answer: A
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms
Corporate Finance,
Jonathan Berk
5th Canadian Edition
PR
O
FD
O
C
,Table of Contents
1. The Corporation and Financial Markets
2. Introduction to Financial Statement Analysis
3. Arbitrage and Financial Decision Making
4. The Time Value of Money
5. Interest Rates
6. Valuing Bonds
7. Valuing Stocks
8. Investment Decision Rules
9. Fundamentals of Capital Budgeting
PR
10. Capital Markets and the Pricing of Risk
11. Optimal Portfolio Choice and the Capital Asset Pricing Model
12. Estimating the Cost of Capital
13. Investor Behaviour and Capital Market Efficiency
O
14. Financial Options
15. Option Valuation
FD
16. Real Options
17. Capital Structure in a Perfect Market
18. Debt and Taxes
19. Financial Distress, Managerial Incentives, and Information
O
20. Payout Policy
21. Capital Budgeting and Valuation with Leverage
C
22. Valuation and Financial Modeling: A Case Study
23. Raising Equity Capital
24. Debt Financing
25. Leasing
26. Working Capital Management
27. Short-Term Financial Planning
28. Mergers and Acquisitions
29. Corporate Governance
30. Risk Management
31. International Corporate Finance
,Chapter 1 The Corporation
1.1 The Three Types of Firms
1) A sole proprietorship is owned by:
A) one person
B) two or more people
C) shareholders
D) bankers
Answer: A
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms
2) In Canada, which of the following organization forms accounts for the greatest number of
firms?
PR
A) Limited Liability Partnership
B) Limited Partnership
C) Sole Proprietorship
D) Publicly Traded Corporation
Answer: C
Diff: 1 Type: MC
O
Topic: 1.1 The Three Types of Firms
3) Which of the following organization forms earns the most revenue?
FD
A) Privately Owned Corporation
B) Limited Partnership
C) Publicly Owned Corporation
D) Limited Liability Company
Answer: C
Diff: 1 Type: MC
O
Topic: 1.1 The Three Types of Firms
4) Which of the following is NOT an advantage of a sole proprietorship?
C
A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and control
Answer: C
Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms
, 5) Which of the following statements regarding limited partnerships is TRUE?
A) There is no limit on a limited partner's liability.
B) A limited partner's liability is limited by the amount of his investment.
C) A limited partner is not liable until all of the assets of the general partners have been
exhausted.
D) A general partner's liability is limited by the amount of his investment.
Answer: B
Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms
6) Which of the following is/are an advantage(s) of incorporation?
A) Access to capital markets
B) Limited liability
C) Unlimited life
D) All of the above
PR
Answer: D
Diff: 2 Type: MC
Topic: 1.1 The Three Types of Firms
7) In Canada, a limited liability partnership, LLP, is essentially:
A) a limited partnership without limited partners
O
B) a limited partnership without a general partner
C) just another name for a limited partnership
D) just another name for a corporation
FD
Answer: B
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms
8) In Canada, which of the following business organization forms cannot avoid double taxation?
A) Limited Partnership
O
B) Publicly Traded Corporation
C) Privately Owned Corporation
D) Limited Liability Company
C
Answer: B
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms
9) In Canada, the dividend tax credit gives some relief by:
A) effectively giving a lower tax rate on dividend income than on other sources of income
B) effectively giving a higher tax rate on dividend income than on other sources of income
C) effectively giving the same tax rate on dividend income as on other sources of income
D) effectively giving a tax rate of zero on dividend income compared to other sources of income
Answer: A
Diff: 1 Type: MC
Topic: 1.1 The Three Types of Firms
