Introduction to Corporate Finance 5th Canadian Edition by Laurence Booth test bank
CHAPTER 1
AN INTRODUCTION TO FINANCE
CHAPTER LEARNING OBJECTIVES
1.1 Define finance and explain what is involved in the study of finance.
1.2 List the major financial and real assets held by Canadians.
1.3 Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
1.4 Identify the basic types of financial instruments that are available and explain how they are traded.
1.5 Explain the importance of the global financial system and how Canada is impacted by global events such as the recent U.S. financial crisis.
MULTIPLE CHOICE QUESTIONS
1. Finance is the study of how and under what terms
a) savings are allocated between lenders and borrowers.
b) investments are allocated between investors and brokers.
c) institutions with excess money make share purchase decisions.
d) households allocate money between spending and saving.
Answer: a
Type: Definition
Difficulty: Easy
Learning Objective: Define finance and explain what is involved in the study of finance.
Section Reference: Finance Defined
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
2. A financial security is
a) a jail term for a financial manager that has committed fraud.
b) a contract that is created only when a new stock is issued to the public.
c) a financial contract created whenever funds are transferred.
d) a contract that is created only when a new bond is first sold.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: Define finance and explain what is involved in the study of finance.
Section Reference: Finance Defined
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
3. Which of the following does NOT appear as an item on Canada’s balance sheet, as presented in the text?
a) non-residential structures
b) net worth or equity
c) net foreign liabilities
d) net foreign assets
Answer: c
Type: Definition
Difficulty: Medium
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
4. Human capital is
a) based on only the current skills, but not the education, of a country’s citizens.
b) based on only the education, but not the current skills, of a country’s citizens.
c) based on the skills and education of citizens and should be included in a country’s wealth.
d) difficult to measure and should therefore not be included in a country’s wealth.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
5. Which of the following items is NOT a real asset?
a) land
b) television
c) bond
d) gold mine
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
6. In the following list, which item is a financial asset?
a) land
b) bond
c) building
d) inventory
Answer: b
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
7. What is the main difference between real assets and financial assets?
a) Real assets are tangible and financial assets are intangible.
b) Real assets have known values, while the values of financial assets are not known.
c) Real assets are intangible and financial assets are tangible.
d) Real assets have unknown values, while the values of financial assets are known.
AN INTRODUCTION TO FINANCE
CHAPTER LEARNING OBJECTIVES
1.1 Define finance and explain what is involved in the study of finance.
1.2 List the major financial and real assets held by Canadians.
1.3 Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
1.4 Identify the basic types of financial instruments that are available and explain how they are traded.
1.5 Explain the importance of the global financial system and how Canada is impacted by global events such as the recent U.S. financial crisis.
MULTIPLE CHOICE QUESTIONS
1. Finance is the study of how and under what terms
a) savings are allocated between lenders and borrowers.
b) investments are allocated between investors and brokers.
c) institutions with excess money make share purchase decisions.
d) households allocate money between spending and saving.
Answer: a
Type: Definition
Difficulty: Easy
Learning Objective: Define finance and explain what is involved in the study of finance.
Section Reference: Finance Defined
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
2. A financial security is
a) a jail term for a financial manager that has committed fraud.
b) a contract that is created only when a new stock is issued to the public.
c) a financial contract created whenever funds are transferred.
d) a contract that is created only when a new bond is first sold.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: Define finance and explain what is involved in the study of finance.
Section Reference: Finance Defined
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
3. Which of the following does NOT appear as an item on Canada’s balance sheet, as presented in the text?
a) non-residential structures
b) net worth or equity
c) net foreign liabilities
d) net foreign assets
Answer: c
Type: Definition
Difficulty: Medium
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
4. Human capital is
a) based on only the current skills, but not the education, of a country’s citizens.
b) based on only the education, but not the current skills, of a country’s citizens.
c) based on the skills and education of citizens and should be included in a country’s wealth.
d) difficult to measure and should therefore not be included in a country’s wealth.
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
5. Which of the following items is NOT a real asset?
a) land
b) television
c) bond
d) gold mine
Answer: c
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
6. In the following list, which item is a financial asset?
a) land
b) bond
c) building
d) inventory
Answer: b
Type: Definition
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
7. What is the main difference between real assets and financial assets?
a) Real assets are tangible and financial assets are intangible.
b) Real assets have known values, while the values of financial assets are not known.
c) Real assets are intangible and financial assets are tangible.
d) Real assets have unknown values, while the values of financial assets are known.