Question 1

A financial security that represents a promise to repay a fixed amount of funds is a

Accepted Answer

A)  share of stock. 
B)  coupon. 
C)  dividend. 
D)  bond. 
A)  share of stock. 
B)  coupon. 
C)  dividend. 
D)  bond.

Question 2

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.

Accepted Answer

A)  primary; primary 
B)  primary; secondary 
C)  secondary; primary 
D)  secondary; secondary 
A)  primary; primary 
B)  primary; secondary 
C)  secondary; primary 
D)  secondary; secondary

Question 3

All of the following represent differences between stocks and bonds except

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)  bonds represent partial ownership in a firm but stocks do not. 
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)  bonds represent partial ownership in a firm but stocks do not.

Question 4

A bond's coupon payment divided by the bond's current price is equal to the bond's

Accepted Answer

A)  dividend yield. 
B)  current yield. 
C)  price-earnings ratio. 
D)  maturity value. 
A)  dividend yield. 
B)  current yield. 
C)  price-earnings ratio. 
D)  maturity value.

Question 5

The Sarbanes-Oxley Act of 2002 was passed in response to what event?

Accepted Answer

A)  a series of accounting scandals 
B)  unexpected increases in dividend payments to stockholders at various corporations 
C)  volatility in NASDAQ indexes 
D)  historically low bond prices 
A)  a series of accounting scandals 
B)  unexpected increases in dividend payments to stockholders at various corporations 
C)  volatility in NASDAQ indexes 
D)  historically low bond prices

Question 6

Which type of businesses earns the majority of revenues in the United States?

Accepted Answer

A)  corporations 
B)  partnerships 
C)  sole proprietorships 
D)  none of these 
A)  corporations 
B)  partnerships 
C)  sole proprietorships 
D)  none of these

Question 7

How do the owners of a partnership relate to the business?

Accepted Answer

A)  The owners and the business are not separate legal entities. 
B)  The owners and the business are separate legal entities. 
C)  The assets of the owners are considered separate from the asset of the business. 
D)  None of these describe the legal relationship of the owners to the business. 
A)  The owners and the business are not separate legal entities. 
B)  The owners and the business are separate legal entities. 
C)  The assets of the owners are considered separate from the asset of the business. 
D)  None of these describe the legal relationship of the owners to the business.

Question 8

Firms disclose financial statements in ________ and in ________.

Accepted Answer

A)  periodic filings to the federal government; annual reports to shareholders 
B)  daily filings to the federal government; daily reports to shareholders 
C)  monthly reports to shareholders; 5-year balance statements to the board of directors 
D)  weekly filings with the SEC; monthly reports to the Fed 
A)  periodic filings to the federal government; annual reports to shareholders 
B)  daily filings to the federal government; daily reports to shareholders 
C)  monthly reports to shareholders; 5-year balance statements to the board of directors 
D)  weekly filings with the SEC; monthly reports to the Fed

Question 9

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 10

What happens in the primary market?

Accepted Answer

A)  primary inputs like electricity are sold 
B)  a corporate financial manager will resell previously issued shares of stock 
C)  newly issued claims are sold by the borrowing firm to the initial buyer 
D)  already issued claims are sold from one investor to another 
A)  primary inputs like electricity are sold 
B)  a corporate financial manager will resell previously issued shares of stock 
C)  newly issued claims are sold by the borrowing firm to the initial buyer 
D)  already issued claims are sold from one investor to another

Question 11

On average,jobs at small firms pay ________ wages than jobs at large firms and are ________ likely to offer fringe benefits such as health insurance and retirement accounts.

Accepted Answer

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The three most widely followed stock indexes in the United States include all of the following except

Accepted Answer

A)  the Dow Jones Industrial Average. 
B)  the S&P 500. 
C)  the Fortune 500. 
D)  The NASDAQ. 
A)  the Dow Jones Industrial Average. 
B)  the S&P 500. 
C)  the Fortune 500. 
D)  The NASDAQ.

Question 14

Mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgage payments are known as ________ mortgages.

Accepted Answer

A)  subprime 
B)  Alt-A 
C)  gray market 
D)  reciprocal 
A)  subprime 
B)  Alt-A 
C)  gray market 
D)  reciprocal

Question 15

What is a firm's balance sheet?

Accepted Answer

A firm's balance sheet is a fi

Question 16

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

Accepted Answer

A)  The owner has complete control over the business. 
B)  A proprietorship has few government rules and regulations to comply with. 
C)  Business profits are only taxed once, not twice. 
D)  A proprietorship can easily attain additional funding. 
A)  The owner has complete control over the business. 
B)  A proprietorship has few government rules and regulations to comply with. 
C)  Business profits are only taxed once, not twice. 
D)  A proprietorship can easily attain additional funding.

Question 17

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

Accepted Answer

Ease of fo

Question 18

In the United States,corporate profits are taxed

Accepted Answer

A)  only at the corporate level. 
B)  only when investors receive dividends. 
C)  at both the corporate level and when investors receive dividends. 
D)  neither at the corporate level nor when investors receive dividends. 
A)  only at the corporate level. 
B)  only when investors receive dividends. 
C)  at both the corporate level and when investors receive dividends. 
D)  neither at the corporate level nor when investors receive dividends.

Question 19

A stock's dividend yield is determined by

Accepted Answer

A)  dividing the dividend payment by the stock's initial price. 
B)  dividing the dividend payment by the stock's closing market price. 
C)  dividing the stock's closing market price by the dividend payment. 
D)  subtracting the stock's initial purchase price from the stocks' closing market price on a given day. 
A)  dividing the dividend payment by the stock's initial price. 
B)  dividing the dividend payment by the stock's closing market price. 
C)  dividing the stock's closing market price by the dividend payment. 
D)  subtracting the stock's initial purchase price from the stocks' closing market price on a given day.

Question 20

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

Accepted Answer

A)  the out-of-pocket expense to hire employees. 
B)  taxes owed to the state government. 
C)  the rental value of the warehouse space the company owns and uses for itself. 
D)  the revenue a firm generates in using its resources. 
A)  the out-of-pocket expense to hire employees. 
B)  taxes owed to the state government. 
C)  the rental value of the warehouse space the company owns and uses for itself. 
D)  the revenue a firm generates in using its resources.

A financial security that represents a promise to repay a fixed amount of funds is a

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.

All of the following represent differences between stocks and bonds except

A bond's coupon payment divided by the bond's current price is equal to the bond's

The Sarbanes-Oxley Act of 2002 was passed in response to what event?

Which type of businesses earns the majority of revenues in the United States?

How do the owners of a partnership relate to the business?

Firms disclose financial statements in and in .

Owners of a corporation share in the profits of the firm

What happens in the primary market?

On average,jobs at small firms pay wages than jobs at large firms and are likely to offer fringe benefits such as health insurance and retirement accounts.

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

The three most widely followed stock indexes in the United States include all of the following except

Mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgage payments are known as ________ mortgages.

What is a firm's balance sheet?

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

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

In the United States,corporate profits are taxed

A stock's dividend yield is determined by

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

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

A financial security that represents a promise to repay a fixed amount of funds is a

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.

All of the following represent differences between stocks and bonds except

A bond's coupon payment divided by the bond's current price is equal to the bond's

The Sarbanes-Oxley Act of 2002 was passed in response to what event?

Which type of businesses earns the majority of revenues in the United States?

How do the owners of a partnership relate to the business?

Firms disclose financial statements in ________ and in ________.

Owners of a corporation share in the profits of the firm

What happens in the primary market?

On average,jobs at small firms pay ________ wages than jobs at large firms and are ________ likely to offer fringe benefits such as health insurance and retirement accounts.

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

The three most widely followed stock indexes in the United States include all of the following except

Mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgage payments are known as ________ mortgages.

What is a firm's balance sheet?

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

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

In the United States,corporate profits are taxed

A stock's dividend yield is determined by

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

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

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.

Firms disclose financial statements in and in .

On average,jobs at small firms pay wages than jobs at large firms and are likely to offer fringe benefits such as health insurance and retirement accounts.