Question 1

Which type of business has the least government rules and regulations affecting it?

Accepted Answer

A) sole proprietorship 
B) partnership 
C) corporation 
D) They all have the same set of rules and regulations affecting them. 
A) sole proprietorship 
B) partnership 
C) corporation 
D) They all have the same set of rules and regulations affecting them.

Question 2

Owners of a corporation share in the profits of the firm

Accepted Answer

A) by selling any bonds or stocks owned and realizing a capital gain. 
B) through coupon payments on that firm's bonds. 
C) through dividend payments on shares of that firm's stock. 
D) by raising the interest rate on bonds. 
A) by selling any bonds or stocks owned and realizing a capital gain. 
B) through coupon payments on that firm's bonds. 
C) through dividend payments on shares of that firm's stock. 
D) by raising the interest rate on bonds.

Question 3

When Potbelly sold stock to the public in its IPO,it did so through the NASDAQ market.This was an example of Potbelly using ________ to raise funds.

Accepted Answer

A) indirect finance 
B) direct finance 
C) bonds 
D) corporate governance 
A) indirect finance 
B) direct finance 
C) bonds 
D) corporate governance

Question 4

What can be done to deal with the principal-agent problem?

Accepted Answer

A) threaten to liquidate the firm 
B) link top manager salaries to the profits of the firm or the price of the firm's stock 
C) have the CEO be a rotating position 
D) forbid managers from owning any company stock 
A) threaten to liquidate the firm 
B) link top manager salaries to the profits of the firm or the price of the firm's stock 
C) have the CEO be a rotating position 
D) forbid managers from owning any company stock

Question 5

A corporation is owned by its

Accepted Answer

A) board of directors. 
B) stockholders. 
C) employees. 
D) CEO. 
A) board of directors. 
B) stockholders. 
C) employees. 
D) CEO.

Question 6

Total dividend payments plus retained earnings divided by outstanding stock shares equals

Accepted Answer

A) the price-earnings ratio. 
B) earnings per share. 
C) the dividend yield. 
D) the year-to-date percentage change. 
A) the price-earnings ratio. 
B) earnings per share. 
C) the dividend yield. 
D) the year-to-date percentage change.

Question 7

If a corporation goes bankrupt,which of the following has first claim on the firm's assets?

Accepted Answer

A) stockholders 
B) the state where chartered 
C) employees 
D) bondholders 
A) stockholders 
B) the state where chartered 
C) employees 
D) bondholders

Question 8

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were ________ than they actually were,resulting in reported accounting profits for WorldCom that were ________ than their actual level.

Accepted Answer

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

Question 9

What is accounting profit?

Accepted Answer

A) gross revenue minus explicit costs 
B) gross revenue minus implicit costs 
C) gross revenue minus explicit and implicit costs 
D) the same as economic profit 
A) gross revenue minus explicit costs 
B) gross revenue minus implicit costs 
C) gross revenue minus explicit and implicit costs 
D) the same as economic profit

Question 10

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 economic profit?

Accepted Answer

A) $17,000 
B) $25,000 
C) $42,000 
D) $47,000 
A) $17,000 
B) $25,000 
C) $42,000 
D) $47,000

Question 11

What is different about buying stocks and buying bonds?

Accepted Answer

A) A stock can possibly pay dividends forever, but bonds have a fixed number of payments. 
B) Differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future. 
C) The future growth of a stock is more uncertain than the payments of a bond. 
D) All these are differences between stocks and bonds. 
A) A stock can possibly pay dividends forever, but bonds have a fixed number of payments. 
B) Differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future. 
C) The future growth of a stock is more uncertain than the payments of a bond. 
D) All these are differences between stocks and bonds.

Question 12

The only type of business that faces limited liability is a corporation.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is part of the secondary market?

Accepted Answer

A) New York Stock Exchange 
B) the over-the-counter market 
C) NASDAQ 
D) all of these 
A) New York Stock Exchange 
B) the over-the-counter market 
C) NASDAQ 
D) all of these

Question 14

What does limited liability mean?

Accepted Answer

A) The owners of the business are personally responsible for paying expenses incurred by the business. 
B) Only employees can have a claim on the assets of the business. 
C) The personal assets of the owners cannot be claimed if the business is bankrupt. 
D) Anybody with a liability against a firm can claim only what their liability refers to. 
A) The owners of the business are personally responsible for paying expenses incurred by the business. 
B) Only employees can have a claim on the assets of the business. 
C) The personal assets of the owners cannot be claimed if the business is bankrupt. 
D) Anybody with a liability against a firm can claim only what their liability refers to.

Question 15

When groups of mortgages are bundled together by financial institutions and sold to investors,these institutions are said to be ________ mortgage loans.

Accepted Answer

A) securitizing 
B) underwriting 
C) liquidating 
D) harvesting 
A) securitizing 
B) underwriting 
C) liquidating 
D) harvesting

Question 16

Which type of business has the most government rules and regulations affecting it?

Accepted Answer

A) sole proprietorship 
B) partnership 
C) corporation 
D) They all have the same set of rules and regulations affecting them. 
A) sole proprietorship 
B) partnership 
C) corporation 
D) They all have the same set of rules and regulations affecting them.

Question 17

A member of a corporate board of directors that is also a manager of the business is known as

Accepted Answer

A) a shareholder. 
B) an inside director. 
C) a partner. 
D) a corporate governor. 
A) a shareholder. 
B) an inside director. 
C) a partner. 
D) a corporate governor.

Question 18

What is the difference between explicit and implicit costs?

Accepted Answer

Explicit costs are out-of-pock

Question 19

Donnie's Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit costs.The bakery earns $800,000 in revenues and has $2 million in net worth.Based on this information,what is the economic profit for Donnie's Donuts?

Accepted Answer

A) $150,000 
B) $350,000 
C) $600,000 
D) $1.2 million 
A) $150,000 
B) $350,000 
C) $600,000 
D) $1.2 million

Question 20

Of the different types of businesses,a corporation has the ________ government rules and the ________ government regulations affecting it.

Accepted Answer

A) least; least 
B) least; most 
C) most; least 
D) most; most 
A) least; least 
B) least; most 
C) most; least 
D) most; most

Which type of business has the least government rules and regulations affecting it?

Owners of a corporation share in the profits of the firm

When Potbelly sold stock to the public in its IPO,it did so through the NASDAQ market.This was an example of Potbelly using ________ to raise funds.

What can be done to deal with the principal-agent problem?

A corporation is owned by its

Total dividend payments plus retained earnings divided by outstanding stock shares equals

If a corporation goes bankrupt,which of the following has first claim on the firm's assets?

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were than they actually were,resulting in reported accounting profits for WorldCom that were than their actual level.

What is accounting profit?

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 economic profit?

What is different about buying stocks and buying bonds?

The only type of business that faces limited liability is a corporation.

Which of the following is part of the secondary market?

What does limited liability mean?

When groups of mortgages are bundled together by financial institutions and sold to investors,these institutions are said to be ________ mortgage loans.

Which type of business has the most government rules and regulations affecting it?

A member of a corporate board of directors that is also a manager of the business is known as

What is the difference between explicit and implicit costs?

Donnie's Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit costs.The bakery earns $800,000 in revenues and has $2 million in net worth.Based on this information,what is the economic profit for Donnie's Donuts?

Of the different types of businesses,a corporation has the government rules and the government regulations affecting it.

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

Which type of business has the least government rules and regulations affecting it?

Owners of a corporation share in the profits of the firm

When Potbelly sold stock to the public in its IPO,it did so through the NASDAQ market.This was an example of Potbelly using ________ to raise funds.

What can be done to deal with the principal-agent problem?

A corporation is owned by its

Total dividend payments plus retained earnings divided by outstanding stock shares equals

If a corporation goes bankrupt,which of the following has first claim on the firm's assets?

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were ________ than they actually were,resulting in reported accounting profits for WorldCom that were ________ than their actual level.

What is accounting profit?

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 economic profit?

What is different about buying stocks and buying bonds?

The only type of business that faces limited liability is a corporation.

Which of the following is part of the secondary market?

What does limited liability mean?

When groups of mortgages are bundled together by financial institutions and sold to investors,these institutions are said to be ________ mortgage loans.

Which type of business has the most government rules and regulations affecting it?

A member of a corporate board of directors that is also a manager of the business is known as

What is the difference between explicit and implicit costs?

Donnie's Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit costs.The bakery earns $800,000 in revenues and has $2 million in net worth.Based on this information,what is the economic profit for Donnie's Donuts?

Of the different types of businesses,a corporation has the ________ government rules and the ________ government regulations affecting it.

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

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were than they actually were,resulting in reported accounting profits for WorldCom that were than their actual level.

Of the different types of businesses,a corporation has the government rules and the government regulations affecting it.