Question 1

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 2

What is the difference between explicit and implicit costs?

Accepted Answer

Explicit costs are out-of-pock

Question 3

Stockholders

Accepted Answer

A)  select the board of directors of a corporation. 
B)  select the employees of a corporation. 
C)  select the managers of a corporation. 
D)  all of the above. 
A)  select the board of directors of a corporation. 
B)  select the employees of a corporation. 
C)  select the managers of a corporation. 
D)  all of the above.

Question 4

If the face value of a bond is $5,000 and the coupon is $200,what is the interest rate?

Accepted Answer

The interest rate,or coupon ra

Question 5

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,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 6

Why is a bond considered to be a loan but a share of stock is not?

Accepted Answer

A bond is a loan because the firm promis

Question 7

How can a sole proprietorship raise funds needed for firm expansion?

Accepted Answer

By retaining earning

Question 8

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 9

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

Accepted Answer

A)  double taxation 
B)  ease in setting up 
C)  limited liability 
D)  greater ability to raise funds 
A)  double taxation 
B)  ease in setting up 
C)  limited liability 
D)  greater ability to raise funds

Question 10

Describe the three main categories of firms.

Accepted Answer

The three main types of firms are sole p

Question 11

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 12

How has organizing a typical firm in a market economy changed over the last century?

Accepted Answer

A)  It has become easier as more and more firms discover how to do it. 
B)  As government intervention has decreased, firms now have more freedom. 
C)  There has been no change one way or the other over the last century. 
D)  It has become more difficult to efficiently organize production. 
A)  It has become easier as more and more firms discover how to do it. 
B)  As government intervention has decreased, firms now have more freedom. 
C)  There has been no change one way or the other over the last century. 
D)  It has become more difficult to efficiently organize production.

Question 13

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time ________that member's independence from the company's CEO.If this is true,it would tend to ________ the principal-agent problem.

Accepted Answer

A)  enhances; increase 
B)  diminishes; increase 
C)  has no impact on; increase 
D)  diminishes; decrease 
A)  enhances; increase 
B)  diminishes; increase 
C)  has no impact on; increase 
D)  diminishes; decrease

Question 14

Direct finance includes the sale by a corporation of stocks or bonds,but does not include borrowing money from a bank.

Accepted Answer

A) True 
 B)False

Question 15

Bonds ________ and stocks ________.

Accepted Answer

A)  have a fixed number of interest payments; have a fixed number of dividend payments 
B)  have a fixed number of interest payments; may pay dividends forever 
C)  may pay interest payments forever; have a fixed number of dividend payments 
D)  always pay interest payments forever; always pay dividends forever 
A)  have a fixed number of interest payments; have a fixed number of dividend payments 
B)  have a fixed number of interest payments; may pay dividends forever 
C)  may pay interest payments forever; have a fixed number of dividend payments 
D)  always pay interest payments forever; always pay dividends forever

Question 16

When an investor buys a corporate bond,the ________ is a loan to the corporation.

Accepted Answer

A)  interest on the bond 
B)  principal of the bond 
C)  bond's dividend payments 
D)  coupon payment 
A)  interest on the bond 
B)  principal of the bond 
C)  bond's dividend payments 
D)  coupon payment

Question 17

Anything owed by a person or a firm is

Accepted Answer

A)  an asset. 
B)  a liability. 
C)  wealth. 
D)  owner's yield. 
A)  an asset. 
B)  a liability. 
C)  wealth. 
D)  owner's yield.

Question 18

Aimee sells hand-embroidered dog apparel over the Internet.Her annual revenue is $128,000 per year,the explicit costs of her business are $42,000,and the opportunity costs of her business are $30,000.What is her accounting profit?

Accepted Answer

A)  $12,000 
B)  $56,000 
C)  $86,000 
D)  $98,000 
A)  $12,000 
B)  $56,000 
C)  $86,000 
D)  $98,000

Question 19

Owners of a corporation ________ through dividend payments on shares of that firm's stock.

Accepted Answer

A)  retain earnings of the firm 
B)  issue bonds for the firm 
C)  share in the profits of the firm 
D)  indirectly finance the firm 
A)  retain earnings of the firm 
B)  issue bonds for the firm 
C)  share in the profits of the firm 
D)  indirectly finance the firm

Question 20

Garrison is the chief financial officer (CFO)of the Colorado Drone manufacturing company and is also on the company's board of directors.Garrison is considered ________ of the company.

Accepted Answer

A)  a bondholder 
B)  an inside director 
C)  a financier 
D)  an outside director 
A)  a bondholder 
B)  an inside director 
C)  a financier 
D)  an outside director

Owners of a corporation share in the profits of the firm

What is the difference between explicit and implicit costs?

Stockholders

If the face value of a bond is $5,000 and the coupon is $200,what is the interest rate?

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,what is the coupon rate?

Why is a bond considered to be a loan but a share of stock is not?

How can a sole proprietorship raise funds needed for firm expansion?

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?

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

Describe the three main categories of firms.

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

How has organizing a typical firm in a market economy changed over the last century?

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time that member's independence from the company's CEO.If this is true,it would tend to the principal-agent problem.

Direct finance includes the sale by a corporation of stocks or bonds,but does not include borrowing money from a bank.

Bonds and stocks .

When an investor buys a corporate bond,the ________ is a loan to the corporation.

Anything owed by a person or a firm is

Aimee sells hand-embroidered dog apparel over the Internet.Her annual revenue is $128,000 per year,the explicit costs of her business are $42,000,and the opportunity costs of her business are $30,000.What is her accounting profit?

Owners of a corporation ________ through dividend payments on shares of that firm's stock.

Garrison is the chief financial officer (CFO)of the Colorado Drone manufacturing company and is also on the company's board of directors.Garrison is considered ________ of the company.

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

Owners of a corporation share in the profits of the firm

What is the difference between explicit and implicit costs?

Stockholders

If the face value of a bond is $5,000 and the coupon is $200,what is the interest rate?

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,what is the coupon rate?

Why is a bond considered to be a loan but a share of stock is not?

How can a sole proprietorship raise funds needed for firm expansion?

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?

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

Describe the three main categories of firms.

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

How has organizing a typical firm in a market economy changed over the last century?

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time ________that member's independence from the company's CEO.If this is true,it would tend to ________ the principal-agent problem.

Direct finance includes the sale by a corporation of stocks or bonds,but does not include borrowing money from a bank.

Bonds ________ and stocks ________.

When an investor buys a corporate bond,the ________ is a loan to the corporation.

Anything owed by a person or a firm is

Aimee sells hand-embroidered dog apparel over the Internet.Her annual revenue is $128,000 per year,the explicit costs of her business are $42,000,and the opportunity costs of her business are $30,000.What is her accounting profit?

Owners of a corporation ________ through dividend payments on shares of that firm's stock.

Garrison is the chief financial officer (CFO)of the Colorado Drone manufacturing company and is also on the company's board of directors.Garrison is considered ________ of the company.

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

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time that member's independence from the company's CEO.If this is true,it would tend to the principal-agent problem.

Bonds and stocks .