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- FIN3403 FINANCIAL MANAGEMENT
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- Florida International University
Fundamentals of Corporate Finance”, 5th Edition. Robert Parrino, David S. Kidwell, Thomas Bates, Stuart L. Gillan (ISBN: 9781119795384)
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TEST BANK for Fundamentals of Corporate Finance,5th Edition by Robert Parrino, David Kidwell, Bates &
Gillan. ISBN 9781119795438 (All Chapters 1-21)
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Fundamentals of Corporate Finance, 5e (Parrino)
Chapter 1 The Financial Manager and the Firm
1) The financial manager is responsible for making decisions that are in the best interests of the
firm's owners.
Answer: TRUE
Diff: 1
Learning Objective: LO 1
Bloomcode: Knowledge
AACSB: Analytic
IMA: FSA
AICPA: Process and Resource Management Perspectives
2) A patent is a productive asset for a technology-based firm.
Answer: TRUE
Diff: 1
Learning Objective: LO 1
Bloomcode: Knowledge
AACSB: Analytic
IMA: Business Economics
AICPA: Global and Industry Perspectives
3) Intangible assets generate most of a manufacturing firm's cash flows.
Answer: FALSE
Diff: 2
Learning Objective: LO 1
Bloomcode: Application
AACSB: Analytic
IMA: Corporate Finance
AICPA: Process and Resource Management Perspectives
4) The most fundamental way a business can grow in size is by reinvesting cash flows or
earnings.
Answer: TRUE
Diff: 1
Learning Objective: LO 1
Bloomcode: Knowledge
AACSB: Analytic
IMA: FSA
AICPA: Process and Resource Management Perspectives
1
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5) A firm that goes bankrupt will always be liquidated.
Answer: FALSE
Diff: 2
Learning Objective: LO 1
Bloomcode: Application
AACSB: Analytic
IMA: Corporate Finance
AICPA: Resource Management
6) Capital assets are generally short term in nature.
Answer: FALSE
Diff: 1
Learning Objective: LO 1
Bloomcode: Knowledge
AACSB: Analytic
IMA: Corporate Finance
AICPA: Process and Resource Management Perspectives
7) A good capital budgeting or investment decision is one in which the benefits are worth more
to the firm than the cost of the project.
Answer: TRUE
Explanation: Regardless of the project, a good investment is one in which the benefits are worth
more to the firm than the costs of the asset.
Diff: 2
Learning Objective: LO 1
Bloomcode: Analysis
AACSB: Analytic
IMA: Budget Preparation
AICPA: Resource Management
8) Investment decisions determine how firms raise capital to pay for their investments.
Answer: FALSE
Diff: 1
Learning Objective: LO 1
Bloomcode: Knowledge
AACSB: Analytic
IMA: Investment Decisions
AICPA: Strategic/Critical Thinking
9) Net working capital is the dollar difference between a firm's total current assets and total
liabilities.
Answer: FALSE
Diff: 1
Learning Objective: LO 1
Bloomcode: Knowledge
AACSB: Analytic
IMA: Budget Preparation
AICPA: Process and Resource Management Perspectives
2
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