Test Bank for Fundamentals of Financial Management, 16th Edition by Eugene F. Brigham
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Course
Financial management
Institution
Financial Management
Test Bank for Fundamentals of Financial Management 16e 16th Edition by Eugene F. Brigham, Joel F. Houston. ISBN-13: 7574
Full Chapters test bank included
Part 1: Introduction to Financial Management
Chapter 1: An Overview of Financial Management
Putting Things in Perspective
1-1: What is F...
1. If a stock's intrinsic value is greater than its market price, then the stock is overvalued and should be sold.
a. True
b. False
2. An advantage of the corporate form of organization is that corporations are generally less highly regulated than
proprietorships and partnerships.
a. True
b. False
3. Organizing as a corporation makes it easier for the firm to raise capital. This is because corporations' stockholders are
not subject to personal liabilities if the firm goes bankrupt and also because it is easier to transfer shares of stock than
partnership interests.
a. True
b. False
4. Partnerships and proprietorships generally have a tax advantage over corporations.
a. True
b. False
5. It is generally harder to transfer one's ownership interest in a partnership than in a corporation.
a. True
b. False
6. A stock's market price would equal its intrinsic value if all investors had all the information that is available about the
stock. In this case the stock's market price would equal its intrinsic value.
a. True
b. False
7. The more capital a firm is likely to require, the greater the probability that it will be organized as a corporation.
a. True
b. False
8. In order to maximize its shareholders' value, a firm's management must attempt to maximize the stock price on a
specific target date.
a. True
b. False
9. The Chairman of the Board must also be the CEO.
a. True
b. False
10. A disadvantage of the corporate form of organization is that corporate stockholders are more exposed to personal
liabilities in the event of bankruptcy than are investors in a typical partnership.
a. True
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