Test Bank Fundamentals of Corporate Finance, 4th Canadian Edition Berk Chapter 1 Corporate Finance and the Financial Manager (Complete And Verified Study material) (906pages) LEARNEXAMS

1.1 Why Study Finance 1) The Valuation Principle shows how to make the costs and benefits of a decision comparable so that we can evaluate them properly. Answer: TRUE Diff: 1 Type: TF Skill: Conceptual Objective: 1.1 Grasp the importance of financial information in both your personal and business lives 2) Which of the following best describes why the Valuation Principle is a key concept in making financial decisions? A) It shows how to assign monetary value to intangibles such as good health and well-being. B) It allows fixed assets and liquid assets to be valued correctly. C) It gives a good indication of the net worth of a person, item, or company and can be used to estimate any changes in that net worth. D) It shows how to make the costs and benefits of a decision comparable so that we can weigh them properly. E) It allows us to produce accurate financial statements. Answer: D Diff: 1 Type: MC Skill: Conceptual Objective: 1.1 Grasp the importance of financial information in both your personal and business lives 3) Both personal financial decisions and business financial decisions can best be made by applying the: A) Internal Ranking Criteria. B) Best Alternatives Matrix. C) Valuation Principle. D) Financial Comparison Analysis. E) Law of One Price. Answer: C Diff: 1 Type: MC Skill: Conceptual Objective: 1.1 Grasp the importance of financial information in both your personal and business lives