fundamentals of corporate finance 11th canadian edition By Stephen A. Ross Test bank
242) One thing lenders sometimes require when lending money to a small corporation is an assignment of the common stock as collateral on the loan. Then, if the business fails to repay its loan, the ownership of the stock certificates can be transferred directly to the lender. Why might a lender want such an assignment? What advantage of the corporate form of organization comes into play here?
243) Why might a corporation wish to list its shares on a national exchange such as the TSX as opposed to a regional exchange? How about being traded OTC?
244) Identify the two capital structure issues that financial managers must address and explain the effects and significance of these issues.
245) Explain the cash flow pattern between a firm and the financial markets.
246) Describe the goal of financial management and give an example of a management compensation program which is designed to encourage managers to adhere to that goal.
247) Describe two types of business organizations in which you could obtain an ownership position while enjoying limited liability. Provide an example of a type of firm that you might find utilizing each business type.
248) Explain how ethics can affect the value of a public corporation.
Answer Key
Test name: Ross11ceCh01
1) TRUE
2) TRUE
3) TRUE
4) TRUE
5) TRUE
6) FALSE
7) FALSE
8) FALSE
9) FALSE
10) TRUE
11) FALSE
12) FALSE
13) TRUE
14) TRUE
15) TRUE
16) TRUE
17) FALSE
18) FALSE
19) FALSE
20) FALSE
21) TRUE
22) FALSE
23) FALSE
24) FALSE
25) FALSE
26) TRUE
27) TRUE
28) TRUE
29) TRUE
30) TRUE
31) FALSE
32) TRUE
33) C
34) A
35) C
36) E
37) C
38) C
39) A