Question 1

What role do well functioning financial markets play in a market economy?

Accepted Answer

They allocate saved

Question 2

Which type of businesses earns the majority of revenues in the United States?

Accepted Answer

A) corporations 
B) partnerships 
C) sole proprietorships 
D) none of these 
A) corporations 
B) partnerships 
C) sole proprietorships 
D) none of these

Question 3

When the coupon rate on newly issued bonds decreases relative to older,outstanding bonds,what happens?

Accepted Answer

A) The market price of the older bond falls in the secondary market. 
B) The market price of the older bond rises in the secondary market. 
C) Older bonds can still be sold at their face value. 
D) Older bonds will sell for more than their face value. 
A) The market price of the older bond falls in the secondary market. 
B) The market price of the older bond rises in the secondary market. 
C) Older bonds can still be sold at their face value. 
D) Older bonds will sell for more than their face value.

Question 4

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

Accepted Answer

Sole proprietorships and partn

Question 5

Who controls a partnership?

Accepted Answer

A) the owners 
B) stockholders 
C) bondholders 
D) employees 
A) the owners 
B) stockholders 
C) bondholders 
D) employees

Question 6

Sole proprietorships are ________ type of business.

Accepted Answer

A) the most profitable 
B) the least common 
C) the most common 
D) the least risky 
A) the most profitable 
B) the least common 
C) the most common 
D) the least risky

Question 7

A financial security that represents a promise to repay a fixed amount of funds is a

Accepted Answer

A) share of stock. 
B) coupon. 
C) dividend. 
D) bond. 
A) share of stock. 
B) coupon. 
C) dividend. 
D) bond.

Question 8

Who controls a partnership?

Accepted Answer

A) stockholders 
B) bondholders 
C) the owners 
D) all of these 
A) stockholders 
B) bondholders 
C) the owners 
D) all of these

Question 9

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

Accepted Answer

A) had more than doubled in price. 
B) had declined by nearly 40 percent from the IPO price. 
C) languished at the same $38 per share price. 
D) had increased by almost 60 percent from the IPO price. 
A) had more than doubled in price. 
B) had declined by nearly 40 percent from the IPO price. 
C) languished at the same $38 per share price. 
D) had increased by almost 60 percent from the IPO price.

Question 10

The principal-agent problem that exists between shareholders and managers also exists between managers and workers.

Accepted Answer

A) True 
 B)False

Question 11

What takes place in the indirect finance market?

Accepted Answer

A) Part ownership of corporations is sold in the form of stocks. 
B) Corporate and government bonds are sold to savers. 
C) Deposits of savers are accepted and loans made to borrowers. 
D) Government purchases of buildings and equipment are sold to the highest bidder. 
A) Part ownership of corporations is sold in the form of stocks. 
B) Corporate and government bonds are sold to savers. 
C) Deposits of savers are accepted and loans made to borrowers. 
D) Government purchases of buildings and equipment are sold to the highest bidder.

Question 12

How can a corporation's board of directors and its managers try to reduce the principal-agent problem?

Accepted Answer

A corporation's board of directors can t

Question 13

An increase in liabilities will reduce a firm's net worth.

Accepted Answer

A) True 
 B)False

Question 14

Explain the relationships between a corporation's shareholders,its board of directors,and its top managers.

Accepted Answer

Shareholders are the legal owners of a c

Question 15

How are corporate profits taxed in the United States?

Accepted Answer

A) Earnings are taxed first by state sales taxes and then as corporate profits at the Federal level. 
B) Earnings are taxed first as personal income then as corporate profits at the Federal level. 
C) Earnings are taxed first as corporate profits then as personal income after dividends are paid. 
D) Corporate profits are not taxed at all. 
A) Earnings are taxed first by state sales taxes and then as corporate profits at the Federal level. 
B) Earnings are taxed first as personal income then as corporate profits at the Federal level. 
C) Earnings are taxed first as corporate profits then as personal income after dividends are paid. 
D) Corporate profits are not taxed at all.

Question 16

A corporation's board of directors

Accepted Answer

A) hire the managers of the corporation. 
B) control the day-to-day activities of the corporation. 
C) are personally liable for the debts of the corporation. 
D) are the sole owners of the corporation. 
A) hire the managers of the corporation. 
B) control the day-to-day activities of the corporation. 
C) are personally liable for the debts of the corporation. 
D) are the sole owners of the corporation.

Question 17

How can a partnership raise funds needed for firm expansion?

Accepted Answer

By retaining earning

Question 18

How does the principal-agent problem extend to managers and employees?

Accepted Answer

Just as corporate shareholders (owners)c

Question 19

Generally with bond ratings,the higher the rating,the ________ the interest rate an investor will receive and the ________ the risk that the issuer of the bond will default.

Accepted Answer

A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower 
A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower

Question 20

Briefly describe the Sarbanes-Oxley Act and explain why it was passed.

Accepted Answer

The Sarbanes-Oxley Act of 2002 was enact

What role do well functioning financial markets play in a market economy?

Which type of businesses earns the majority of revenues in the United States?

When the coupon rate on newly issued bonds decreases relative to older,outstanding bonds,what happens?

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

Who controls a partnership?

Sole proprietorships are ________ type of business.

A financial security that represents a promise to repay a fixed amount of funds is a

Who controls a partnership?

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

The principal-agent problem that exists between shareholders and managers also exists between managers and workers.

What takes place in the indirect finance market?

How can a corporation's board of directors and its managers try to reduce the principal-agent problem?

An increase in liabilities will reduce a firm's net worth.

Explain the relationships between a corporation's shareholders,its board of directors,and its top managers.

How are corporate profits taxed in the United States?

A corporation's board of directors

How can a partnership raise funds needed for firm expansion?

How does the principal-agent problem extend to managers and employees?

Generally with bond ratings,the higher the rating,the the interest rate an investor will receive and the the risk that the issuer of the bond will default.

Briefly describe the Sarbanes-Oxley Act and explain why it was passed.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 6: Firms, the Stock Market, and Corporate Governance

What role do well functioning financial markets play in a market economy?

Which type of businesses earns the majority of revenues in the United States?

When the coupon rate on newly issued bonds decreases relative to older,outstanding bonds,what happens?

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

Who controls a partnership?

Sole proprietorships are ________ type of business.

A financial security that represents a promise to repay a fixed amount of funds is a

Who controls a partnership?

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

The principal-agent problem that exists between shareholders and managers also exists between managers and workers.

What takes place in the indirect finance market?

How can a corporation's board of directors and its managers try to reduce the principal-agent problem?

An increase in liabilities will reduce a firm's net worth.

Explain the relationships between a corporation's shareholders,its board of directors,and its top managers.

How are corporate profits taxed in the United States?

A corporation's board of directors

How can a partnership raise funds needed for firm expansion?

How does the principal-agent problem extend to managers and employees?

Generally with bond ratings,the higher the rating,the ________ the interest rate an investor will receive and the ________ the risk that the issuer of the bond will default.

Briefly describe the Sarbanes-Oxley Act and explain why it was passed.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Generally with bond ratings,the higher the rating,the the interest rate an investor will receive and the the risk that the issuer of the bond will default.