Test Bank Fundamentals of Corporate Finance, 11th Edition by Richard Brealey, Stewart Myers, Alan Marcus.
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Course
Corporate Finance
Institution
Corporate Finance
Test Bank Fundamentals of Corporate Finance, 11th Edition by Richard Brealey, Stewart Myers, Alan Marcus.
ISBN13: 9781264101566.
chapters 1 to 24 test bank for Corporate Finance 11e brealey.
TEST BANK Fundamentals of Corporate Finance, 11/E by Richard Brealey
Chap 01. Goals and Governance of the Corporation.
1) Which one of these is a disadvantage of the corporate form of business?
A) Access to capital
B) Unlimited personal liability for owners
C) Limited firm life
D) Legal requirements
2) Which one of the following gives a corporation its permanence?
A) Multiple owners
B) Limited liability
C) Corporation taxation
D) Separation of ownership and control
3) In a partnership form of organization, income tax liability, if any, is incurred by:
A) the partnership itself.
B) the partners individually.
C) both the partnership and the partners.
D) neither the partnership nor the partners.
4) Which one of the following would correctly differentiate general partners from limited
partners in a limited partnership?
A) General partners have more job experience.
B) General partners have an ownership interest.
C) General partners are subject to double taxation.
D) General partners have unlimited personal liability.
1
,Chap 01. Goals and Governance of the Corporation.
5) Which form of organization provides limited liability for the firm but yet allows the
professionals working within that firm to be sued personally?
A) Limited liability partnership
B) Limited liability company
C) Sole proprietorship
D) Professional corporation
6) Which of the following organizations is least likely to use a professional corporation (PC)
structure?
A) Accountants
B) Doctors
C) Lawyers
D) Manufacturers
7) Which of the following is least likely to be discussed in the articles of incorporation?
A) How the firm is to be financed
B) The purpose of the business
C) The price range of the shares of stock
D) How the board of directors is to be structured
8) When a corporation fails, the maximum that can be lost by an individual shareholder is:
A) the amount of their initial investment.
B) the amount of their share of the profits.
C) their proportionate share required to pay the corporation's debts.
D) the amount of their personal wealth.
2
,Chap 01. Goals and Governance of the Corporation.
9) Which of the following is a disadvantage to incorporating a business?
A) Easier access to financial markets
B) Limited liability
C) Becoming a permanent legal entity
D) Profits taxed at the corporate level and the shareholder level
10) Unlimited liability is faced by the owners of:
A) corporations.
B) partnerships and corporations.
C) sole proprietorships and general partnerships.
D) all forms of business organization.
11) Which one of these statements correctly applies to a limited partnership?
A) All partners share the daily management duties.
B) All partners enjoy limited personal liability.
C) General partners have unlimited personal liability.
D) Taxes are imposed at both the firm and the personal level on profits earned.
12) In the case of a limited liability partnership, _________ has/have limited liability.
A) only some of partners
B) only the managing partner
C) all of the partners
D) none of the partners
3
, Chap 01. Goals and Governance of the Corporation.
13) A board of directors is elected as a representative of the corporation's:
A) top management.
B) stakeholders.
C) shareholders.
D) customers.
14) The legal "life" of a corporation is:
A) coincidental with that of its CEO.
B) equal to the life of its board of directors.
C) permanent, as long as shareholders don't change.
D) permanent, regardless of current ownership.
15) In which type of organizational structure is the agency problem least likely to exist?
A) Limited liability corporation
B) Partnership
C) Professional corporation
D) Sole proprietorship
16) When the management of a business is conducted by individuals other than the sole
owners, the business is most likely to be a:
A) corporation.
B) sole proprietorship.
C) partnership.
D) general partner.
17) "Double taxation" refers to:
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