Question 1

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50,what is the coupon rate?

Accepted Answer

A)  2.5% 
B)  4% 
C)  25% 
D)  40% 
A)  2.5% 
B)  4% 
C)  25% 
D)  40%

Question 2

Who controls a partnership?

Accepted Answer

A)  stockholders 
B)  bondholders 
C)  the owner s 
D)  all of these 
A)  stockholders 
B)  bondholders 
C)  the owner s 
D)  all of these

Question 3

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

Accepted Answer

A)  If the retained earnings are expected to create future profits, the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold. 
B)  Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments. 
C)  Owners will only benefit if some profits are paid out in the form of dividends. 
D)  Owners will benefit by changing the board of directors. 
A)  If the retained earnings are expected to create future profits, the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold. 
B)  Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments. 
C)  Owners will only benefit if some profits are paid out in the form of dividends. 
D)  Owners will benefit by changing the board of directors.

Question 4

A proprietorship or partnership can raise funds for expansion in all of the following ways except

Accepted Answer

A)  borrowing from someone or an institution willing to lend the funds. 
B)  reinvesting profit back into the business. 
C)  taking on a partner or more partners. 
D)  issuing stock through financial markets. 
A)  borrowing from someone or an institution willing to lend the funds. 
B)  reinvesting profit back into the business. 
C)  taking on a partner or more partners. 
D)  issuing stock through financial markets.

Question 5

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 accounting 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 6

How does the owner of a corporation relate to the business?

Accepted Answer

A)  The owners of the business have a separate legal distinction from the business. 
B)  The owners of the business have no separate legal distinction from the business. 
C)  The personal assets are part of the corporation's assets. 
D)  None of these describe the legal relationship of corporate owners to the business. 
A)  The owners of the business have a separate legal distinction from the business. 
B)  The owners of the business have no separate legal distinction from the business. 
C)  The personal assets are part of the corporation's assets. 
D)  None of these describe the legal relationship of corporate owners to the business.

Question 7

The value you give today to money you will receive in the future is called the future payment's

Accepted Answer

A)  time-sensitive value. 
B)  future value. 
C)  present value. 
D)  historical value. 
A)  time-sensitive value. 
B)  future value. 
C)  present value. 
D)  historical value.

Question 8

How is economic profit found?

Accepted Answer

Economic profits equ

Question 9

You have a bond that pays $60 per year in coupon payments.Which of the following would result in a decrease in the price of your bond?

Accepted Answer

A)  Coupon payments on newly-issued bonds fall to $40 per year. 
B)  The likelihood that the firm issuing your bond will default on debt decreases. 
C)  The price of a share of stock in the company rises. 
D)  Coupon payments on newly-issued bonds rise to $75 per year. 
A)  Coupon payments on newly-issued bonds fall to $40 per year. 
B)  The likelihood that the firm issuing your bond will default on debt decreases. 
C)  The price of a share of stock in the company rises. 
D)  Coupon payments on newly-issued bonds rise to $75 per year.

Question 10

Normally,the principal-agent problem

Accepted Answer

A)  occurs in publicly traded companies. 
B)  occurs in privately held companies. 
C)  occurs in sole proprietorships. 
D)  is equally severe in all of the above examples. 
A)  occurs in publicly traded companies. 
B)  occurs in privately held companies. 
C)  occurs in sole proprietorships. 
D)  is equally severe in all of the above examples.

Question 11

If you purchase a share of stock from your friend who initially purchased the stock three years ago,your purchase of the stock represents a transaction in the primary financial market

Accepted Answer

A) True 
 B)False

Question 12

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?

Accepted Answer

A)  $10,000 
B)  $22,000 
C)  $32,000 
D)  $42,000 
A)  $10,000 
B)  $22,000 
C)  $32,000 
D)  $42,000

Question 13

What was the source of the problems encountered by many financial firms during the late 2000s?

Accepted Answer

The primary source of the problems was t

Question 14

Two of the firms involved in the accounting scandals of the early 2000s were

Accepted Answer

A)  Arthur Anderson and NBC. 
B)  Western Digital and General Motors. 
C)  WorldCom and Enron. 
D)  DuPont and Lehman Brothers. 
A)  Arthur Anderson and NBC. 
B)  Western Digital and General Motors. 
C)  WorldCom and Enron. 
D)  DuPont and Lehman Brothers.

Question 15

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He asks his friend,Carmen,if she'd like to join him in setting up a partnership to start the business.What is one disadvantage in joining the partnership that Carmen should consider?

Accepted Answer

A)  Carmen should realize that profits in the partnership will be reduced by dividend payments to shareholders. 
B)  Carmen should realize that, as an owner of the business, she will be personally responsible for the debts of the business. 
C)  Carmen should realize that the profits of the business will also be taxed as dividend income, so she faces the potential for double taxation of that business income. 
D)  Carmen should realize that the Jeremy will have complete control over the business because it was his idea. 
A)  Carmen should realize that profits in the partnership will be reduced by dividend payments to shareholders. 
B)  Carmen should realize that, as an owner of the business, she will be personally responsible for the debts of the business. 
C)  Carmen should realize that the profits of the business will also be taxed as dividend income, so she faces the potential for double taxation of that business income. 
D)  Carmen should realize that the Jeremy will have complete control over the business because it was his idea.

Question 16

The financial statements of firms generally are audited by

Accepted Answer

A)  employees of the firm being audited. 
B)  employees of private accounting firms. 
C)  employees of the federal government. 
D)  the board of directors of the corporation being audited. 
A)  employees of the firm being audited. 
B)  employees of private accounting firms. 
C)  employees of the federal government. 
D)  the board of directors of the corporation being audited.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Facebook is an example of a private firm.As a private firm,Facebook is

Accepted Answer

A)  not subject to government regulations and taxation. 
B)  run by stockholders and a board of directors. 
C)  run by its founder, Mark Zuckerberg. 
D)  not legally allowed to raise funds through venture capital firms. 
A)  not subject to government regulations and taxation. 
B)  run by stockholders and a board of directors. 
C)  run by its founder, Mark Zuckerberg. 
D)  not legally allowed to raise funds through venture capital firms.

Question 19

What are earnings per share equal to?

Accepted Answer

A)  the last dividend payment made 
B)  total dividend payments plus retained earnings divided by outstanding stock shares 
C)  the amount by which the stock's market price has increased in the last year 
D)  revenues divided by the number of stockholders 
A)  the last dividend payment made 
B)  total dividend payments plus retained earnings divided by outstanding stock shares 
C)  the amount by which the stock's market price has increased in the last year 
D)  revenues divided by the number of stockholders

Question 20

One result of the financial meltdown of the late 2000s was that mortgage institutions ________ and ________ were brought under direct control of the government.

Accepted Answer

A)  Fannie Mae; Freddie Mac 
B)  Glass Steagall; Sarbanes Oxley 
C)  Goldman Sachs; Morgan Stanley 
D)  Lehman Brothers; FDIC 
A)  Fannie Mae; Freddie Mac 
B)  Glass Steagall; Sarbanes Oxley 
C)  Goldman Sachs; Morgan Stanley 
D)  Lehman Brothers; FDIC

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50,what is the coupon rate?

Who controls a partnership?

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

A proprietorship or partnership can raise funds for expansion in all of the following ways except

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 accounting profit for Donnie's Donuts?

How does the owner of a corporation relate to the business?

The value you give today to money you will receive in the future is called the future payment's

How is economic profit found?

You have a bond that pays $60 per year in coupon payments.Which of the following would result in a decrease in the price of your bond?

Normally,the principal-agent problem

If you purchase a share of stock from your friend who initially purchased the stock three years ago,your purchase of the stock represents a transaction in the primary financial market

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?

What was the source of the problems encountered by many financial firms during the late 2000s?

Two of the firms involved in the accounting scandals of the early 2000s were

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He asks his friend,Carmen,if she'd like to join him in setting up a partnership to start the business.What is one disadvantage in joining the partnership that Carmen should consider?

The financial statements of firms generally are audited by

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

Facebook is an example of a private firm.As a private firm,Facebook is

What are earnings per share equal to?

One result of the financial meltdown of the late 2000s was that mortgage institutions and were brought under direct control of the government.

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

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50,what is the coupon rate?

Who controls a partnership?

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

A proprietorship or partnership can raise funds for expansion in all of the following ways except

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 accounting profit for Donnie's Donuts?

How does the owner of a corporation relate to the business?

The value you give today to money you will receive in the future is called the future payment's

How is economic profit found?

You have a bond that pays $60 per year in coupon payments.Which of the following would result in a decrease in the price of your bond?

Normally,the principal-agent problem

If you purchase a share of stock from your friend who initially purchased the stock three years ago,your purchase of the stock represents a transaction in the primary financial market

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?

What was the source of the problems encountered by many financial firms during the late 2000s?

Two of the firms involved in the accounting scandals of the early 2000s were

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He asks his friend,Carmen,if she'd like to join him in setting up a partnership to start the business.What is one disadvantage in joining the partnership that Carmen should consider?

The financial statements of firms generally are audited by

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

Facebook is an example of a private firm.As a private firm,Facebook is

What are earnings per share equal to?

One result of the financial meltdown of the late 2000s was that mortgage institutions ________ and ________ were brought under direct control of the government.

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

One result of the financial meltdown of the late 2000s was that mortgage institutions and were brought under direct control of the government.