Principles Of Corporate Finance, Second Canadian Edition Test Bank

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ExamName___________________________________MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.1)Profit maximization fails because it ignores all EXCEPT1)A)cash flows available to stockholders.B)risk.C)earnings per share.D)the timing of returns.Answer:CExplanation:A)B)C)D)2)The officer responsible for the firm's financial activities such as financial planning and fund raising,making capital expenditure decisions, and managing cash, credit, the pension fund, and foreignexchange is2)A)the foreign exchange manager.B)the treasurer.C)the controller.D)none of the above.Answer:BExplanation:A)B)C)D)3)A company determines its overall cost of capital by3)A)calculating the percent of earnings paid out in dividendsB)multiplying the percentage of debt in the capital structure by the percentage of equityC)multiplying the percentage of debt by its cost and adding the result to the percentage ofequity multiplied by its costD)calculating the average cost of interest rates paid on loans and other debt instrumentsAnswer:CExplanation:A)B)C)D)4)Return and risk are the key determinants in share price. Increased risk, other things remaining thesame, results in4)A)a higher share price.B)an undetermined share price.C)a lower share price.D)an unchanged share price.Answer:CExplanation:A)B)C)D)1

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