Question 1

What is the primary difference between a sole proprietorship and a partnership?

Accepted Answer

A)  Proprietorships have unlimited liability while partnerships have limited liability. 
B)  Partnerships can issue stocks and bonds while proprietorships cannot. 
C)  Partnerships have more owners than do proprietorships. 
D)  There is no real difference between the two types of firms. 
A)  Proprietorships have unlimited liability while partnerships have limited liability. 
B)  Partnerships can issue stocks and bonds while proprietorships cannot. 
C)  Partnerships have more owners than do proprietorships. 
D)  There is no real difference between the two types of firms.

Question 2

In many corporations,the managers of the corporation run the corporation,although the shareholders own the corporation.In this situation

Accepted Answer

A)  there are no inside directors on the board of directors. 
B)  there is separation of ownership from control. 
C)  there are no outside directors on the board of directors. 
D)  there is no corporate governance. 
A)  there are no inside directors on the board of directors. 
B)  there is separation of ownership from control. 
C)  there are no outside directors on the board of directors. 
D)  there is no corporate governance.

Question 3

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

Accepted Answer

The firm's

Question 4

Javier wants to start a microbrewery business and is thinking of setting it up as a sole proprietorship.What are the advantages and disadvantages he will face by setting up the business as a sole proprietorship as opposed to a partnership or a corporation?

Accepted Answer

As a sole proprietorship,Javier has the

Question 5

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

Accepted Answer

A)  utility expenses. 
B)  the cost of raw materials used in production. 
C)  the rental value of equipment the company owns and uses for its own production. 
D)  advertising expenses. 
A)  utility expenses. 
B)  the cost of raw materials used in production. 
C)  the rental value of equipment the company owns and uses for its own production. 
D)  advertising expenses.

Question 6

Walmart wants to raise $250 million to finance the renovation of their retail stores,and the company wishes to raise the funds through indirect finance.Which of the following methods could it use?

Accepted Answer

A)  It could issue $250 million in stock. 
B)  It could sell $250 million in bonds. 
C)  It could borrow $250 million from a bank. 
D)  It could choose either A or B. 
A)  It could issue $250 million in stock. 
B)  It could sell $250 million in bonds. 
C)  It could borrow $250 million from a bank. 
D)  It could choose either A or B.

Question 7

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

Accepted Answer

Corporations earn profits that

Question 8

According to the textbook,which of the following must a firm in a market economy do today to succeed?

Accepted Answer

A)  produce new or better goods or services 
B)  efficiently organize production 
C)  produce existing goods and services at a lower cost 
D)  Market firms today must do all of these things. 
A)  produce new or better goods or services 
B)  efficiently organize production 
C)  produce existing goods and services at a lower cost 
D)  Market firms today must do all of these things.

Question 9

In the eyes of the law,a corporation is a legal "person," separate from its owners.Explain what this means.

Accepted Answer

This means that the firm is a separate l

Question 10

In a given year,________ of smartphone or tablet owners will pay for any apps.

Accepted Answer

A)  less than 15 percent 
B)  only about one-third 
C)  about 75 percent 
D)  almost 90 percent 
A)  less than 15 percent 
B)  only about one-third 
C)  about 75 percent 
D)  almost 90 percent

Question 11

A firm's accounting profit is also its

Accepted Answer

A)  economic profit. 
B)  income statement. 
C)  net income. 
D)  statement of liabilities. 
A)  economic profit. 
B)  income statement. 
C)  net income. 
D)  statement of liabilities.

Question 12

Explain what information that changes in the value of a firm's stocks provide for a firm's managers and for investors.

Accepted Answer

Changes in the value of a firm's stocks

Question 13

An income statement shows a firm's revenue,costs,and profit

Accepted Answer

A)  for the firm's fiscal year. 
B)  since the firm has been in operation. 
C)  for a particular day. 
D)  only if the firm is earning an accounting profit. 
A)  for the firm's fiscal year. 
B)  since the firm has been in operation. 
C)  for a particular day. 
D)  only if the firm is earning an accounting profit.

Question 14

If Abercrombie & Fitch borrows $8 million from a bank to finance the construction of a new store,this is an example of

Accepted Answer

A)  a stock market transaction. 
B)  direct finance. 
C)  a bond market transaction. 
D)  indirect finance. 
A)  a stock market transaction. 
B)  direct finance. 
C)  a bond market transaction. 
D)  indirect finance.

Question 15

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 16

Which type of business has the most government rules and regulations affecting it?

Accepted Answer

A)  sole proprietorship 
B)  partnership 
C)  corporation 
D)  They all have the same set of rules and regulations affecting them. 
A)  sole proprietorship 
B)  partnership 
C)  corporation 
D)  They all have the same set of rules and regulations affecting them.

Question 17

Explain what potential conflict exists between shareholders in a corporation and the corporation's managers.

Accepted Answer

The "principal-agent problem" exists any

Question 18

The person hired by a corporation's board of directors to ________ is known as the chief executive officer.

Accepted Answer

A)  chair the board of directors 
B)  run the day-to-day operations of the corporation 
C)  audit the financial records of the corporation 
D)  hire additional members for the board of directors 
A)  chair the board of directors 
B)  run the day-to-day operations of the corporation 
C)  audit the financial records of the corporation 
D)  hire additional members for the board of directors

Question 19

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 20

If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent,American Airlines would pay you

Accepted Answer

A)  $33.33 per year for 30 years plus $1,000 at the end of the 30th year. 
B)  $30 per year for 30 years. 
C)  $30 per year for 30 years plus $1,000 at the end of the 30th year. 
D)  $33.33 per year plus 3 percent per year for 30 years. 
A)  $33.33 per year for 30 years plus $1,000 at the end of the 30th year. 
B)  $30 per year for 30 years. 
C)  $30 per year for 30 years plus $1,000 at the end of the 30th year. 
D)  $33.33 per year plus 3 percent per year for 30 years.

What is the primary difference between a sole proprietorship and a partnership?

In many corporations,the managers of the corporation run the corporation,although the shareholders own the corporation.In this situation

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

Javier wants to start a microbrewery business and is thinking of setting it up as a sole proprietorship.What are the advantages and disadvantages he will face by setting up the business as a sole proprietorship as opposed to a partnership or a corporation?

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

Walmart wants to raise $250 million to finance the renovation of their retail stores,and the company wishes to raise the funds through indirect finance.Which of the following methods could it use?

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

According to the textbook,which of the following must a firm in a market economy do today to succeed?

In the eyes of the law,a corporation is a legal "person," separate from its owners.Explain what this means.

In a given year,________ of smartphone or tablet owners will pay for any apps.

A firm's accounting profit is also its

Explain what information that changes in the value of a firm's stocks provide for a firm's managers and for investors.

An income statement shows a firm's revenue,costs,and profit

If Abercrombie & Fitch borrows $8 million from a bank to finance the construction of a new store,this is an example of

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

Which type of business has the most government rules and regulations affecting it?

Explain what potential conflict exists between shareholders in a corporation and the corporation's managers.

The person hired by a corporation's board of directors to ________ is known as the chief executive officer.

In the United States,corporate profits are taxed

If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent,American Airlines would pay you

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

What is the primary difference between a sole proprietorship and a partnership?

In many corporations,the managers of the corporation run the corporation,although the shareholders own the corporation.In this situation

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

Javier wants to start a microbrewery business and is thinking of setting it up as a sole proprietorship.What are the advantages and disadvantages he will face by setting up the business as a sole proprietorship as opposed to a partnership or a corporation?

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

Walmart wants to raise $250 million to finance the renovation of their retail stores,and the company wishes to raise the funds through indirect finance.Which of the following methods could it use?

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

According to the textbook,which of the following must a firm in a market economy do today to succeed?

In the eyes of the law,a corporation is a legal "person," separate from its owners.Explain what this means.

In a given year,________ of smartphone or tablet owners will pay for any apps.

A firm's accounting profit is also its

Explain what information that changes in the value of a firm's stocks provide for a firm's managers and for investors.

An income statement shows a firm's revenue,costs,and profit

If Abercrombie & Fitch borrows $8 million from a bank to finance the construction of a new store,this is an example of

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

Which type of business has the most government rules and regulations affecting it?

Explain what potential conflict exists between shareholders in a corporation and the corporation's managers.

The person hired by a corporation's board of directors to ________ is known as the chief executive officer.

In the United States,corporate profits are taxed

If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent,American Airlines would pay you

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