Question 1

Net worth and stockholders' equity are both equal to the difference between assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 2

Dividing the dividend payment by the stock's closing market price determines the

Accepted Answer

A)  coupon payment. 
B)  dividend yield. 
C)  price-earnings ratio. 
D)  selling price of the stock. 
A)  coupon payment. 
B)  dividend yield. 
C)  price-earnings ratio. 
D)  selling price of the stock.

Question 3

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 4

Payments by a corporation to its shareholders are known as

Accepted Answer

A)  stocks. 
B)  bonds. 
C)  coupons. 
D)  dividends. 
A)  stocks. 
B)  bonds. 
C)  coupons. 
D)  dividends.

Question 5

Accounting profit is the difference between a firm's revenue and its opportunity costs.

Accepted Answer

A) True 
 B)False

Question 6

When you buy newly-issued shares of Google stock,this transaction takes place in the

Accepted Answer

A)  primary market. 
B)  bond market. 
C)  secondary market. 
D)  bear market. 
A)  primary market. 
B)  bond market. 
C)  secondary market. 
D)  bear market.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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?

Accepted Answer

The answer of If you own a bond with a...

Question 9

In a typical year,________ of new jobs are created by small firms.

Accepted Answer

A)  less than 5 percent 
B)  10 percent 
C)  40 percent 
D)  75 percent 
A)  less than 5 percent 
B)  10 percent 
C)  40 percent 
D)  75 percent

Question 10

Who operates and controls a corporation in its day-to-day activities?

Accepted Answer

A)  the board of directors 
B)  stockholders 
C)  employees 
D)  management 
A)  the board of directors 
B)  stockholders 
C)  employees 
D)  management

Question 11

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 12

A sole proprietorship is

Accepted Answer

A)  the easiest type of business to set up. 
B)  the most difficult type of business to set up. 
C)  the most expensive type of business to set up. 
D)  the least profitable type of business to set up. 
A)  the easiest type of business to set up. 
B)  the most difficult type of business to set up. 
C)  the most expensive type of business to set up. 
D)  the least profitable type of business to set up.

Question 13

If you own a $1,000 face value bond with one year remaining to maturity and a five percent coupon rate and new bonds are paying 12 percent,what is the most you can get for your old bond?

Accepted Answer

A)  $1,120 
B)  $1,000 
C)  $937.50 
D)  impossible to determine without additional information 
A)  $1,120 
B)  $1,000 
C)  $937.50 
D)  impossible to determine without additional information

Question 14

Which of the following would explain why accounting profit might be greater than economic profit?

Accepted Answer

A)  A firm has implicit costs as well as explicit costs. 
B)  A firm has only explicit costs. 
C)  A firm's net income is greater than its accounting profit. 
D)  A firm's net income is less than its accounting profit. 
A)  A firm has implicit costs as well as explicit costs. 
B)  A firm has only explicit costs. 
C)  A firm's net income is greater than its accounting profit. 
D)  A firm's net income is less than its accounting profit.

Question 15

If you put $100 into a bank account that earns five percent interest per year,what is the formula you should use to determine the account's future value in one year?

Accepted Answer

A)  Future value equals the present value divided by the rate of interest. 
B)  Future value equals the present value multiplied by the rate of interest. 
C)  Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D)  All of these yield the same answer. 
A)  Future value equals the present value divided by the rate of interest. 
B)  Future value equals the present value multiplied by the rate of interest. 
C)  Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D)  All of these yield the same answer.

Question 16

Corporations are legally owned by their shareholders.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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.

Accepted Answer

A)  reduced; much 
B)  reduced; little 
C)  increased; much 
D)  increased; little 
A)  reduced; much 
B)  reduced; little 
C)  increased; much 
D)  increased; little

Question 19

The profits a corporation keeps to finance future expansion are known as

Accepted Answer

A)  retained earnings. 
B)  preferred stock. 
C)  dividends. 
D)  capital gains. 
A)  retained earnings. 
B)  preferred stock. 
C)  dividends. 
D)  capital gains.

Question 20

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

Accepted Answer

A)  The owner has limited personal liability. 
B)  A proprietorship has few government rules and regulations to comply with. 
C)  Business profits are not taxed. 
D)  A proprietorship can easily attain additional funding. 
A)  The owner has limited personal liability. 
B)  A proprietorship has few government rules and regulations to comply with. 
C)  Business profits are not taxed. 
D)  A proprietorship can easily attain additional funding.

Net worth and stockholders' equity are both equal to the difference between assets and liabilities.

Dividing the dividend payment by the stock's closing market price determines the

Which of the following is part of the secondary market?

Payments by a corporation to its shareholders are known as

Accounting profit is the difference between a firm's revenue and its opportunity costs.

When you buy newly-issued shares of Google stock,this transaction takes place in the

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

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?

In a typical year,________ of new jobs are created by small firms.

Who operates and controls a corporation in its day-to-day activities?

What is accounting profit?

A sole proprietorship is

If you own a $1,000 face value bond with one year remaining to maturity and a five percent coupon rate and new bonds are paying 12 percent,what is the most you can get for your old bond?

Which of the following would explain why accounting profit might be greater than economic profit?

If you put $100 into a bank account that earns five percent interest per year,what is the formula you should use to determine the account's future value in one year?

Corporations are legally owned by their shareholders.

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

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.

The profits a corporation keeps to finance future expansion are known as

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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

Net worth and stockholders' equity are both equal to the difference between assets and liabilities.

Dividing the dividend payment by the stock's closing market price determines the

Which of the following is part of the secondary market?

Payments by a corporation to its shareholders are known as

Accounting profit is the difference between a firm's revenue and its opportunity costs.

When you buy newly-issued shares of Google stock,this transaction takes place in the

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

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?

In a typical year,________ of new jobs are created by small firms.

Who operates and controls a corporation in its day-to-day activities?

What is accounting profit?

A sole proprietorship is

If you own a $1,000 face value bond with one year remaining to maturity and a five percent coupon rate and new bonds are paying 12 percent,what is the most you can get for your old bond?

Which of the following would explain why accounting profit might be greater than economic profit?

If you put $100 into a bank account that earns five percent interest per year,what is the formula you should use to determine the account's future value in one year?

Corporations are legally owned by their shareholders.

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

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.

The profits a corporation keeps to finance future expansion are known as

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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.