Chapterg01g-gIntroductiongtogCorporategFinance
Chapterg01
IntroductiongtogCorporategFinance
gg
MultiplegChoicegQuestions
g
1.gWhichgonegofgthegfollowinggtermsgisgdefinedgasgthegmanagementgofgagfirm'sglong-
termginvestments?g
A.gworkinggcapitalgmanagement
B.gfinancialgallocation
C.gagencygcostganalysis
D.gcapitalgbudgeting
E.gcapitalgstructure
g
2.gWhichgonegofgthegfollowinggtermsgisgdefinedgasgthegmixturegofgagfirm'sgdebtgandgequitygfin
ancing?g
A.gworkinggcapitalgmanagement
B.gcashgmanagement
C.gcostganalysis
D.gcapitalgbudgeting
E.gcapitalgstructure
g
3.gWhichgonegofgthegfollowinggisgdefinedgasgagfirm'sgshort-termgassetsgandgitsgshort-
termgliabilities?g
A.gworkinggcapital
B.gdebt
C.ginvestmentgcapital
D.gnetgcapital
E.gcapitalgstructure
g
4.gAgbusinessgownedgbygagsolitarygindividualgwhoghasgunlimitedgliabilitygforgitsgdebtgisgcalled
ga:g
A.gcorporation.
B.gsolegproprietorship.
C.ggeneralgpartnership.
D.glimitedgpartnership.
E.glimitedgliabilitygcompany.
g
1-1
,Chapterg01g-gIntroductiongtogCorporategFinance
5.gAgbusinessgformedgbygtwogorgmoregindividualsgwhogeachghavegunlimitedgliabilitygforgallgof
gthegfirm'sgbusinessgdebtsgisgcalledga:g
A.gcorporation.
B.gsolegproprietorship.
C.ggeneralgpartnership.
D.glimitedgpartnership.
E.glimitedgliabilitygcompany.
g
6.gAgbusinessgpartnergwhosegpotentialgfinancialglossgingthegpartnershipgwillgnotgexceedghisgorg
herginvestmentgingthatgpartnershipgisgcalledga:g
A.ggenerallygpartner.
B.gsolegproprietor.
C.glimitedgpartner.
D.gcorporategshareholder.
E.gzerogpartner.
g
7.gAgbusinessgcreatedgasgagdistinctglegalgentitygandgtreatedgasgaglegalg"person"gisgcalledga:g
A.gcorporation.
B.gsolegproprietorship.
C.ggeneralgpartnership.
D.glimitedgpartnership.
E.gunlimitedgliabilitygcompany.
g
8.gWhichgonegofgthegfollowinggtermsgisgdefinedgasgagconflictgofginterestgbetweengthegcorporate
gshareholdersgandgthegcorporategmanagers?g
A.garticlesgofgincorporation
B.gcorporategbreakdown
C.gagencygproblem
D.gbylaws
E.glegalgliability
g
1-2
,Chapterg01g-gIntroductiongtogCorporategFinance
9.gAgstakeholdergis:g
A.gagpersongwhogownsgsharesgofgstock.
B.ganygpersongwhoghasgvotinggrightsgbasedgongstockgownershipgofgagcorporation.
C.gagpersongwhoginitiallygfoundedgagfirmgandgcurrentlyghasgmanagementgcontrolgovergthatgfir
m.
D.gagcreditorgtogwhomgagfirmgcurrentlygowesgmoney.
E.ganygpersongorgentitygothergthangagstockholdergorgcreditorgwhogpotentiallyghasgagclaimgongth
egcashgflowsgofgagfirm.
g
10.gWhichgofgthegfollowinggquestionsgaregaddressedgbygfinancialgmanagers?
I.gHowgshouldgagproductgbegmarketed?
II.gShouldgcustomersgbeggiveng30gorg45gdaysgtogpaygforgtheirgcreditgpurchases?
III.gShouldgthegfirmgborrowgmoregmoney?
IV.gShouldgthegfirmgacquiregnewgequipment?g
A.gIgandgIVgonly
B.gIIgandgIIIgonly
C.gI,gII,gandgIIIgonly
D.gII,gIII,gandgIVgonly
E.gI,gII,gIII,gandgIV
g
11.gWhichgonegofgthegfollowinggfunctionsgshouldgbegthegresponsibilitygofgthegcontrollergrather
gthangthegtreasurer?g
A.gdailygcashgdeposit
B.gincomegtaxgreturns
C.gequipmentgpurchaseganalysis
D.gcustomergcreditgapproval
E.gpaymentgtogagvendor
g
12.gThegcontrollergofgagcorporationggenerallygreportsgdirectlygtogthe:g
A.gboardgofgdirectors.
B.gchairmangofgthegboard.
C.gchiefgexecutivegofficer.
D.gpresident.
E.gvicegpresidentgofgfinance.
g
1-3
, Chapterg01g-gIntroductiongtogCorporategFinance
13.gWhichgonegofgthegfollowinggcorrectlygdefinesgthegupwardgchaingofgcommandgingagtypicalg
corporategorganizationalgstructure?g
A.gThegvicegpresidentgofgfinancegreportsgtogthegchairmangofgthegboard.
B.gThegchiefgexecutivegofficergreportsgtogpresident.
C.gThegcontrollergreportsgtogthegpresident.
D.gThegtreasurergreportsgtogthegvicegpresidentgofgfinance.
E.gThegchiefgoperationsgofficergreportsgtogthegvicegpresidentgofgproduction.
g
14.gWhichgonegofgthegfollowinggisgagcapitalgbudgetinggdecision?g
A.gdeterminingghowgmanygsharesgofgstockgtogissue
B.gdecidinggwhethergorgnotgtogpurchasegagnewgmachinegforgthegproductiongline
C.gdecidingghowgtogrefinancegagdebtgissuegthatgisgmaturing
D.gdeterminingghowgmuchginventorygtogkeepgonghand
E.gdeterminingghowgmuchgmoneygshouldgbegkeptgingthegcheckinggaccount
g
15.gWhichgofgthegfollowinggshouldgagfinancialgmanagergconsidergwhenganalyzinggagcapitalgbu
dgetinggproject?
I.gprojectgstartgupgcosts
II.gtiminggofgallgprojectedgcashgflows
III.gdependabilitygofgfuturegcashgflows
IV.gdollargamountgofgeachgprojectedgcashgflowg
A.gIgandgIVgonly
B.gI,gII,gandgIVgonly
C.gI,gII,gandgIIIgonly
D.gII,gIII,gandgIVgonly
E.gI,gII,gIII,gandgIV
g
16.gWhichgonegofgthegfollowinggisgagcapitalgstructuregdecision?g
A.gdetermininggwhichgonegofgtwogprojectsgtogaccept
B.gdeterminingghowgtogallocateginvestmentgfundsgtogmultiplegprojects
C.gdetermininggthegamountgofgfundsgneededgtogfinancegcustomergpurchasesgofgagnewgproduct
D.gdeterminingghowgmuchgdebtgshouldgbegassumedgtogfundgagproject
E.gdeterminingghowgmuchginventorygwillgbegneededgtogsupportgagproject
g
1-4
Chapterg01
IntroductiongtogCorporategFinance
gg
MultiplegChoicegQuestions
g
1.gWhichgonegofgthegfollowinggtermsgisgdefinedgasgthegmanagementgofgagfirm'sglong-
termginvestments?g
A.gworkinggcapitalgmanagement
B.gfinancialgallocation
C.gagencygcostganalysis
D.gcapitalgbudgeting
E.gcapitalgstructure
g
2.gWhichgonegofgthegfollowinggtermsgisgdefinedgasgthegmixturegofgagfirm'sgdebtgandgequitygfin
ancing?g
A.gworkinggcapitalgmanagement
B.gcashgmanagement
C.gcostganalysis
D.gcapitalgbudgeting
E.gcapitalgstructure
g
3.gWhichgonegofgthegfollowinggisgdefinedgasgagfirm'sgshort-termgassetsgandgitsgshort-
termgliabilities?g
A.gworkinggcapital
B.gdebt
C.ginvestmentgcapital
D.gnetgcapital
E.gcapitalgstructure
g
4.gAgbusinessgownedgbygagsolitarygindividualgwhoghasgunlimitedgliabilitygforgitsgdebtgisgcalled
ga:g
A.gcorporation.
B.gsolegproprietorship.
C.ggeneralgpartnership.
D.glimitedgpartnership.
E.glimitedgliabilitygcompany.
g
1-1
,Chapterg01g-gIntroductiongtogCorporategFinance
5.gAgbusinessgformedgbygtwogorgmoregindividualsgwhogeachghavegunlimitedgliabilitygforgallgof
gthegfirm'sgbusinessgdebtsgisgcalledga:g
A.gcorporation.
B.gsolegproprietorship.
C.ggeneralgpartnership.
D.glimitedgpartnership.
E.glimitedgliabilitygcompany.
g
6.gAgbusinessgpartnergwhosegpotentialgfinancialglossgingthegpartnershipgwillgnotgexceedghisgorg
herginvestmentgingthatgpartnershipgisgcalledga:g
A.ggenerallygpartner.
B.gsolegproprietor.
C.glimitedgpartner.
D.gcorporategshareholder.
E.gzerogpartner.
g
7.gAgbusinessgcreatedgasgagdistinctglegalgentitygandgtreatedgasgaglegalg"person"gisgcalledga:g
A.gcorporation.
B.gsolegproprietorship.
C.ggeneralgpartnership.
D.glimitedgpartnership.
E.gunlimitedgliabilitygcompany.
g
8.gWhichgonegofgthegfollowinggtermsgisgdefinedgasgagconflictgofginterestgbetweengthegcorporate
gshareholdersgandgthegcorporategmanagers?g
A.garticlesgofgincorporation
B.gcorporategbreakdown
C.gagencygproblem
D.gbylaws
E.glegalgliability
g
1-2
,Chapterg01g-gIntroductiongtogCorporategFinance
9.gAgstakeholdergis:g
A.gagpersongwhogownsgsharesgofgstock.
B.ganygpersongwhoghasgvotinggrightsgbasedgongstockgownershipgofgagcorporation.
C.gagpersongwhoginitiallygfoundedgagfirmgandgcurrentlyghasgmanagementgcontrolgovergthatgfir
m.
D.gagcreditorgtogwhomgagfirmgcurrentlygowesgmoney.
E.ganygpersongorgentitygothergthangagstockholdergorgcreditorgwhogpotentiallyghasgagclaimgongth
egcashgflowsgofgagfirm.
g
10.gWhichgofgthegfollowinggquestionsgaregaddressedgbygfinancialgmanagers?
I.gHowgshouldgagproductgbegmarketed?
II.gShouldgcustomersgbeggiveng30gorg45gdaysgtogpaygforgtheirgcreditgpurchases?
III.gShouldgthegfirmgborrowgmoregmoney?
IV.gShouldgthegfirmgacquiregnewgequipment?g
A.gIgandgIVgonly
B.gIIgandgIIIgonly
C.gI,gII,gandgIIIgonly
D.gII,gIII,gandgIVgonly
E.gI,gII,gIII,gandgIV
g
11.gWhichgonegofgthegfollowinggfunctionsgshouldgbegthegresponsibilitygofgthegcontrollergrather
gthangthegtreasurer?g
A.gdailygcashgdeposit
B.gincomegtaxgreturns
C.gequipmentgpurchaseganalysis
D.gcustomergcreditgapproval
E.gpaymentgtogagvendor
g
12.gThegcontrollergofgagcorporationggenerallygreportsgdirectlygtogthe:g
A.gboardgofgdirectors.
B.gchairmangofgthegboard.
C.gchiefgexecutivegofficer.
D.gpresident.
E.gvicegpresidentgofgfinance.
g
1-3
, Chapterg01g-gIntroductiongtogCorporategFinance
13.gWhichgonegofgthegfollowinggcorrectlygdefinesgthegupwardgchaingofgcommandgingagtypicalg
corporategorganizationalgstructure?g
A.gThegvicegpresidentgofgfinancegreportsgtogthegchairmangofgthegboard.
B.gThegchiefgexecutivegofficergreportsgtogpresident.
C.gThegcontrollergreportsgtogthegpresident.
D.gThegtreasurergreportsgtogthegvicegpresidentgofgfinance.
E.gThegchiefgoperationsgofficergreportsgtogthegvicegpresidentgofgproduction.
g
14.gWhichgonegofgthegfollowinggisgagcapitalgbudgetinggdecision?g
A.gdeterminingghowgmanygsharesgofgstockgtogissue
B.gdecidinggwhethergorgnotgtogpurchasegagnewgmachinegforgthegproductiongline
C.gdecidingghowgtogrefinancegagdebtgissuegthatgisgmaturing
D.gdeterminingghowgmuchginventorygtogkeepgonghand
E.gdeterminingghowgmuchgmoneygshouldgbegkeptgingthegcheckinggaccount
g
15.gWhichgofgthegfollowinggshouldgagfinancialgmanagergconsidergwhenganalyzinggagcapitalgbu
dgetinggproject?
I.gprojectgstartgupgcosts
II.gtiminggofgallgprojectedgcashgflows
III.gdependabilitygofgfuturegcashgflows
IV.gdollargamountgofgeachgprojectedgcashgflowg
A.gIgandgIVgonly
B.gI,gII,gandgIVgonly
C.gI,gII,gandgIIIgonly
D.gII,gIII,gandgIVgonly
E.gI,gII,gIII,gandgIV
g
16.gWhichgonegofgthegfollowinggisgagcapitalgstructuregdecision?g
A.gdetermininggwhichgonegofgtwogprojectsgtogaccept
B.gdeterminingghowgtogallocateginvestmentgfundsgtogmultiplegprojects
C.gdetermininggthegamountgofgfundsgneededgtogfinancegcustomergpurchasesgofgagnewgproduct
D.gdeterminingghowgmuchgdebtgshouldgbegassumedgtogfundgagproject
E.gdeterminingghowgmuchginventorygwillgbegneededgtogsupportgagproject
g
1-4
