answers the question.

Version 1 1

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.1) Jenna has been promoted and is now in charge of all external financing. In other words,

she is in charge of:

• capital structure management.
• asset allocation.
• risk management.
• capital budgeting.
• working capital management.

2) Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of

debt and equity is referred to as the firm's:

• capital structure.
• capital budget.
• asset allocation.
• working capital.
• risk structure.

3) Theo’s BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions

related to these accounts are referred to as:

• capital structure decisions.
• capital budgeting decisions.
• working capital management.
• operating management.
• fixed account structure.

4) Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts?Chapter 1 (Essentials of Corporate Finance, 10e Stephen Ross, Randolph Westerfield, Bradford Jordan) (Test Bank, Answer at the end of each Chapter) (For Complete File, Download link at the end of this File) 1 / 4

Version 1 2

• Sole proprietorship
• Limited partnership
• Corporation
• Joint stock company
• General partnership

5) Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California.Will and Bill will equally share in the decision making and in the business profits or losses.Which type of business did they create if they both have full personal liability for the firm's debts?

• Sole proprietorship
• Limited partnership
• Corporation
• Joint stock company
• General partnership

6) Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm's debts?

• Limited partnership
• Corporation
• Sole proprietorship
• General partnership
• Public company

7) The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict? 2 / 4

Version 1 3

• Organizational
• Structural
• Formative
• Agency
• Territorial

8) An employee has a claim on the cash flows of Martin’s Machines. This claim is defined

as a claim by one of the firm's:

• residual owners.
• shareholders.
• financiers.
• provisional partners.
• stakeholders.

9) The shareholders of Weil’s Markets would benefit if the firm were to be acquired by Better Foods. However, Weil’s board of directors rejects the acquisition offer. This is an example

of:

• a corporate takeover.
• a capital structure issue.
• a working capital decision.
• an agency conflict.
• a compensation issue.

10) When conducting a financial analysis of a firm, financial analysts: 3 / 4

Version 1 4

• cannot use accounting information as it is historical.
• rely solely on accounting information.
• frequently use accounting information.
• ignore accounting information but do use marketing information.
• assume the future will be a repeat of the past as reflected in the firm’s accounting

reports.

11) Jamie is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance?

• International finance
• Financial institutions
• Corporate finance
• Capital management
• Personal finance

12) If you accept a job as a domestic security analyst for a brokerage firm, you are most likely working in which one of the following financial areas?

• International finance
• Private placements
• Corporate finance
• Capital management
• Investments

13) Which one of the following occupations best fits into the corporate area of finance?

• Mortgage broker
• Treasury bill analyst
• Chief financial officer
• Insurance risk manager
• Local bank manager
• / 4