Test Bank For Fundamentals of Corporate Finance Canadian 9th 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) A)
Paying management bonuses based on the number of store locations opened during
the year. B) Basing management bonuses on the attainment of specific financial goals. C)
Accepting a project that enhances both management salaries and the market value
of the firm’s stock. D) Requiring stockholder’s approval of all management compensation decisions. E) 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
partner rather than a general partner? 2) 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
decisions? 3) 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
4)
The corporate officer generally responsible for tasks related to tax management, cost
accounting, financial accounting, and data processing is the: 4) A) Chairman of the Board. B) Corporate Treasurer. C) Director. D) Vice President of Operations. E) Corporate Controller. Answer: E
Explanation: A) B) C) D) E)