Test Bank For Fundamentals Of Corporate Finance 9th Canadian Edition By Ross
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
| 1) Which one of the following actions is the best example of an agency problem? | 1) |
- Paying management bonuses based on the number of store locations opened during the year.
- Basing management bonuses on the attainment of specific financial goals.
- Accepting a project that enhances both management salaries and the market value of the firm’s stock.
- Requiring stockholders approval of all management compensation decisions.
- Paying management bonuses based on the current market value of the firm’s stock.
Answer: A
Explanation: A)
B)
C)
D)
E)
| 2) Which one of the following best describes the primary advantage of being a limited | 2) | |
| partner rather than a general partner? | ||
| A) Entitlement to a larger portion of the partnership’s income. | ||
| B) Liability for firm debts limited to the capital invested. | ||
| C) Greater management responsibility. | ||
| D) Ability to manage the day-to-day affairs of the business. | ||
| E) No potential financial loss. | ||
| Answer: B | ||
| Explanation: | A) | |
| B) | ||
| C) | ||
| D) | ||
| E) | ||
| 3) Which of the following accounts does not relate to working capital management | 3) | |
| decisions? | ||
| A) Short-term debt. | ||
| B) Accounts receivable. | ||
| C) Long-term debt. | ||
| D) Inventory. | ||
| E) Accounts payable. | ||
| Answer: C | ||
| Explanation: | A) | |
| B) | ||
| C) | ||
| D) | ||
| E) | ||
1
- The corporate officer generally responsible for tasks related to tax management, cost accounting, financial accounting, and data processing is the:
- Chairman of the Board.
- Corporate Treasurer.
- Vice President of Operations.
- Corporate Controller.
Answer: E
Explanation: A)
B)
C)
D)
E)
- The corporate officer generally responsible for tasks related to cash and credit management, financial planning, and capital expenditures is the:
- Corporate Controller.
- Chairman of the Board.
- Vice President of Operations.
- Corporate Treasurer.
Answer: D
Explanation: A)
B)
C)
D)
E)
