Question 1

Which type of business is the most difficult to set up?

Accepted Answer

A)  sole proprietorship 
B)  partnership 
C)  corporation 
D)  There is no difference in the difficulty of establishment. 
A)  sole proprietorship 
B)  partnership 
C)  corporation 
D)  There is no difference in the difficulty of establishment.

Question 2

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

Accepted Answer

A)  separation of ownership and business liability 
B)  enhanced ability to raise funds 
C)  ability to share risks 
D)  possibility of double taxation 
A)  separation of ownership and business liability 
B)  enhanced ability to raise funds 
C)  ability to share risks 
D)  possibility of double taxation

Question 3

What is shown on a firm's income statement?

Accepted Answer

A)  costs 
B)  profits 
C)  revenues 
D)  All of these are shown on a firm's income statement. 
A)  costs 
B)  profits 
C)  revenues 
D)  All of these are shown on a firm's income statement.

Question 4

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 5

On a balance sheet,short-term debts such as accounts payable are listed as

Accepted Answer

A)  current assets. 
B)  current liabilities. 
C)  stockholder's equity. 
D)  goodwill. 
A)  current assets. 
B)  current liabilities. 
C)  stockholder's equity. 
D)  goodwill.

Question 6

What is the present value of $575 in a one year if the current rate of interest is 4 percent?

Accepted Answer

A)  $410.71 
B)  $552.88 
C)  $598 
D)  $805 
A)  $410.71 
B)  $552.88 
C)  $598 
D)  $805

Question 7

What type of business has the potential for double taxation of profits and why?

Accepted Answer

Corporations earn profits that

Question 8

All of the following would be considered explicit costs of operating a business except

Accepted Answer

A)  rent paid to a landlord. 
B)  bonuses paid to employees. 
C)  a normal rate of return for investors. 
D)  corporate income taxes. 
A)  rent paid to a landlord. 
B)  bonuses paid to employees. 
C)  a normal rate of return for investors. 
D)  corporate income taxes.

Question 9

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues and has $5 million in net worth.Based on this information,what is economic profit for Laura's Pizza Place?

Accepted Answer

A)  $200,000 
B)  $400,000 
C)  $500,000 
D)  $2.8 million 
A)  $200,000 
B)  $400,000 
C)  $500,000 
D)  $2.8 million

Question 10

How do unlimited and limited liability differ?

Accepted Answer

Unlimited liability means that

Question 11

A bond is a financial security that represents

Accepted Answer

A)  ownership in a corporation. 
B)  the portion of profits paid to shareholders. 
C)  the interest rate paid on a share of stock. 
D)  a promise to repay a fixed amount of funds. 
A)  ownership in a corporation. 
B)  the portion of profits paid to shareholders. 
C)  the interest rate paid on a share of stock. 
D)  a promise to repay a fixed amount of funds.

Question 12

Which of the following is operating income?

Accepted Answer

A)  explicit plus implicit costs 
B)  stockholders' equity 
C)  revenue minus operating expenses 
D)  net profit 
A)  explicit plus implicit costs 
B)  stockholders' equity 
C)  revenue minus operating expenses 
D)  net profit

Question 13

If a corporate bond with face value of $1,000 has an interest rate of eight percent paid once a year for a term of 30 years,what is the size of the coupon payment?

Accepted Answer

A)  $1,000 
B)  $300 
C)  $80 
D)  $8 
A)  $1,000 
B)  $300 
C)  $80 
D)  $8

Question 14

The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5%?

Accepted Answer

A)  300/(1.5)5 
B)  300/(1.05)5 
C)  300 × 1.5 × 5 
D)  5.05/300 
A)  300/(1.5)5 
B)  300/(1.05)5 
C)  300 × 1.5 × 5 
D)  5.05/300

Question 15

Which is the least common type of business?

Accepted Answer

A)  corporation 
B)  partnership 
C)  sole proprietorship 
D)  impossible to determine without further information 
A)  corporation 
B)  partnership 
C)  sole proprietorship 
D)  impossible to determine without further information

Question 16

When a business is set up as a sole proprietorship,the owner of the business faces limited liability.

Accepted Answer

A) True 
 B)False

Question 17

The central role of ________ in a market economy is bringing together savers and borrowers.

Accepted Answer

A)  corporations 
B)  sole proprietors 
C)  financial intermediaries 
D)  stock exchanges 
A)  corporations 
B)  sole proprietors 
C)  financial intermediaries 
D)  stock exchanges

Question 18

In 2002,the Enron corporation was accused of falsifying information regarding liabilities on Enron's balance sheets,thereby

Accepted Answer

A)  increasing Enron's assets on the balance sheet. 
B)  reducing Enron's profit on the balance sheet. 
C)  increasing Enron's net worth on the balance sheet. 
D)  reducing Enron's net income on the income statement. 
A)  increasing Enron's assets on the balance sheet. 
B)  reducing Enron's profit on the balance sheet. 
C)  increasing Enron's net worth on the balance sheet. 
D)  reducing Enron's net income on the income statement.

Question 19

In November 2011,General Motors (GM)posted a price-earnings ratio of 4.73.If the price of the stock at that time was $23 per share,which of the following must have been true?

Accepted Answer

A)  GM's revenues that month were $250.2 million. 
B)  GM's earnings per share was $4.86. 
C)  GM's coupon payment was $23 per year. 
D)  GM's dividend yield for the year was 20.6%. 
A)  GM's revenues that month were $250.2 million. 
B)  GM's earnings per share was $4.86. 
C)  GM's coupon payment was $23 per year. 
D)  GM's dividend yield for the year was 20.6%.

Question 20

Define a partnership.

Accepted Answer

A partnership is a f

Which type of business is the most difficult to set up?

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

What is shown on a firm's income statement?

What is different about buying stocks and buying bonds?

On a balance sheet,short-term debts such as accounts payable are listed as

What is the present value of $575 in a one year if the current rate of interest is 4 percent?

What type of business has the potential for double taxation of profits and why?

All of the following would be considered explicit costs of operating a business except

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues and has $5 million in net worth.Based on this information,what is economic profit for Laura's Pizza Place?

How do unlimited and limited liability differ?

A bond is a financial security that represents

Which of the following is operating income?

If a corporate bond with face value of $1,000 has an interest rate of eight percent paid once a year for a term of 30 years,what is the size of the coupon payment?

The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5%?

Which is the least common type of business?

When a business is set up as a sole proprietorship,the owner of the business faces limited liability.

The central role of ________ in a market economy is bringing together savers and borrowers.

In 2002,the Enron corporation was accused of falsifying information regarding liabilities on Enron's balance sheets,thereby

In November 2011,General Motors (GM)posted a price-earnings ratio of 4.73.If the price of the stock at that time was $23 per share,which of the following must have been true?

Define a partnership.

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

Which type of business is the most difficult to set up?

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

What is shown on a firm's income statement?

What is different about buying stocks and buying bonds?

On a balance sheet,short-term debts such as accounts payable are listed as

What is the present value of $575 in a one year if the current rate of interest is 4 percent?

What type of business has the potential for double taxation of profits and why?

All of the following would be considered explicit costs of operating a business except

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues and has $5 million in net worth.Based on this information,what is economic profit for Laura's Pizza Place?

How do unlimited and limited liability differ?

A bond is a financial security that represents

Which of the following is operating income?

If a corporate bond with face value of $1,000 has an interest rate of eight percent paid once a year for a term of 30 years,what is the size of the coupon payment?

The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5%?

Which is the least common type of business?

When a business is set up as a sole proprietorship,the owner of the business faces limited liability.

The central role of ________ in a market economy is bringing together savers and borrowers.

In 2002,the Enron corporation was accused of falsifying information regarding liabilities on Enron's balance sheets,thereby

In November 2011,General Motors (GM)posted a price-earnings ratio of 4.73.If the price of the stock at that time was $23 per share,which of the following must have been true?

Define a partnership.

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