ActSc371_Lecture 2_practice problems (Ross)

ActSc371_Lecture 2_practice problems (Ross) - ActSc 371...

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Lecture 2 Practice Questions ActSc 371 – Corporate Finance 1 Instructor: Dr. Lysa Porth 1
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Introduction 1. Firms issue securities or financial instruments (or claims) to raise capital. These claims are classified as: A) stocks or bonds B) debt or equity C) contingent claims on the value of the firm D) all of the above E) none of the above. Answer: D 2
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Introduction 2. In terms of the balance sheet model of the firm, the value of the firm in financial markets is equal to: A) tangible fixed assets plus intangible fixed assets. B) sales minus costs. C) cash inflow minus cash outflow. D) the value of the debt plus the value of the equity. E) the value of the debt minus the value of the equity. 3
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Introduction 3. Capital structure is defined as the major financing of the firm. The capital structure is divided: A) between debt holders and creditors B) creditors and equityholders C) assets and liabilities D) all of the above E) none of the above Answer: B 4
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Introduction 4. The need to manage net working capital arises
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ActSc371_Lecture 2_practice problems (Ross) - ActSc 371...

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