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

If you own a bond with a seven percent coupon rate and new bonds are paying five percent,what will happen to your bond's market price?

How do firms raise external funds through indirect finance?

Raising funds through financial intermediaries is called

How does the owner of a sole proprietorship relate to the business?

Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year,the explicit costs of her business are $17,000,and the opportunity costs of her business are $22,000.What is her accounting profit?

Which of the following is an advantage of starting a new business as a proprietorship?

All of the following represent differences between stocks and bonds except

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

A normal rate of return refers to the ________ that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested.

All of the following are examples of explicit cost a firm might incur except

Anything of value owned by a person or a firm is

Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year,the explicit costs of her business are $17,000,and the opportunity costs of her business are $22,000.What are the implicit costs of her business?

What is a corporate bond and what does it specify?

In a typical year,________ new firms open in the United States.

When Zynga,the company behind the social games CityVille and Words With Friends,sold stock to the public for the first time in December 2011,funds were being raised in a ________ market,and when those newly issued shares are resold to other buyers,the sales take place in a ________ market.

When an investor buys a corporate bond,the ________ the bond is a loan to the corporation.

Which of the following is not an advantage of starting a new business as a proprietorship?

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,and the explicit costs of his business are $10,000.What is his accounting profit?

Traditionally,Wall Street investment banks had been organized as partnerships,but by 2000 they had converted to being publicly traded companies.As partnerships,the principal-agent problem is ________ because there is ________ separation of ownership from control.

Southwest Airlines wants to raise $20 million to finance the renovation of their corporate offices,and the company wishes to raise the funds through direct finance.Which of the following methods could it use?