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test1 - Chapter 1-The Scope of Corporate Finance MULTIPLE...

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Chapter 1—The Scope of Corporate Finance MULTIPLE CHOICE 1. One of the tasks for financial managers when identifying projects that increase firm value is to identify those projects where a. marginal benefits are at least equal to the project’s marginal costs. b. taking the project will increase the book value of the firm’s common stock. c. taking the project wll decrease the book value of the firm’s debt outstanding. d. none of the above ANS: A DIF: E REF: Learning Objectives 2. Which finance career classification involves analyzing a firm’s business processes and strategies as well as recommending a change in practice in order to make a firm more competitive? 3. If you would like to work in finance by trading debt and equity securities for customers, then which finance career classification should you target? 4. Which form of invested capital is subject to most of the firm’s business and financial risk? 5. Which of the following is not a true capital-raising event for the firm? a. primary market transaction b. secondary market transaction c. initial public offering d. a corporate loan from a bank ANS: B DIF: E REF: 1.2 The Growing Importance of Financial Markets 6. The total value of primary stock and bond offerings sold by corporations and other entitites per year increased by a significant amount during the 1993 -2003 period. That increase most closely corresponds to
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DIF: H REF: 1.2 The Growing Importance of Financial Markets 7. Which of the following is not one of the five basic corporate finance functions? 8. William and Theodore have decided to start a travel business called Excellent Adventures. Since their business primarily involves time-travel their clients may be harmed during a small but significant portion of the travels. Consequently, William and Theodore would like a business form that will shield their personal wealth from any legal claims that the firm might be subject to after one of the travel mishaps. If William and Theodore are the only investors in this U.S. domiciled firm, which legal form of organization would be best for Excellent Adventures to protect both William and Theodore?
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