B. Issues in the surrounding business environment of a firm which have no impact on the firm’s operations or policies. C. Members of the of directors who are not employed by the firm. D. None of the above. Answer: A Type: Definition Level of Difficulty: Easy LO: 2.2 17. Why are externalities a necessary consideration when conducting business, especially for large corporations? A. Externalities always cost money, and those costs hurt a firm’s bottom line. B. Forgetting to account for externalities is against tax laws in Canada. C. The actions a large firm makes can have a significant impact on other firms, and those actions may not necessarily be in Canada’s best interests. D. All of the above. Answer: C Type: Concept Level of Difficulty: Medium LO: 2.2 18. Which of the following is/are considered a stakeholder in a mining company? A. Bondholders B. Customers C. Provincial government D. All of the above Answer: D Type: Concept of Difficulty: Easy LO: 2.2 19. Which one of the following is part of externalities? not A. Union pension costs and regulations B. High borrowing rate C. Labour regulations D. Cost of carbon emissions Answer: B Type: Concept Level of Difficulty: Medium LO: 2.2 20. Who, of the following, does not have a contractual on a company? A. Employees B. Shareholders C. Local community D. Customers Answer: C Type: Concept Level of Difficulty: Medium LO: 2.2 21. What is the risk-return tradeoff? A. A firm will only have returns when it takes on risk. B. A firm can either have risk, or it can have returns, but not both. C. The balancing of gain with risk. D. A risky return is always preferred to a risk-free return. Answer: C Type: Definition Level of Difficulty: Easy LO: 2.2 22. Which one of the following is not true about the board of directors? A. It represents shareholders interests B. It cannot ignore its stakeholders C. It is involved with guiding the management of the company
B. Issues in the surrounding business environment of a firm which have no impact on the firm’s operations or policies. C. Members of the of directors who are not employed by the firm. D. None of the above. Answer: A Type: Definition Level of Difficulty: Easy LO: 2.2 17. Why are externalities a necessary consideration when conducting business, especially for large corporations? A. Externalities always cost money, and those costs hurt a firm’s bottom line. B. Forgetting to account for externalities is against tax laws in Canada. C. The actions a large firm makes can have a significant impact on other firms, and those actions may not necessarily be in Canada’s best interests. D. All of the above. Answer: C Type: Concept Level of Difficulty: Medium LO: 2.2 18. Which of the following is/are considered a stakeholder in a mining company? A. Bondholders B. Customers C. Provincial government D. All of the above Answer: D Type: Concept of Difficulty: Easy LO: 2.2 19. Which one of the following is not part of externalities? A. Union pension costs and regulations B. High borrowing rate C. Labour regulations D. Cost of carbon emissions Answer: B Type: Concept Level of Difficulty: Medium LO: 2.2 20. Who, of the following, does not have a contractual on a company? A. Employees B. Shareholders C. Local community D. Customers Answer: C Type: Concept Level of Difficulty: Medium LO: 2.2 21. What is the risk-return tradeoff? A. A firm will only have returns when it takes on risk. B. A firm can either have risk, or it can have returns, but not both. C. The balancing of gain with risk. D. A risky return is always preferred to a risk-free return. Answer: C Type: Definition Level of Difficulty: Easy LO: 2.2 22. Which one of the following is not true about the board of directors? A. It represents shareholders interests B. It cannot ignore its stakeholders C. It is involved with guiding the management of the company
Test-Bank-Introduction-to-Corporate-Finance-2nd-Edition-Booth.docx