Question 1

How is accounting profit calculated?

Accepted Answer

Accounting profit eq

Question 2

Assume you and your best friend set up a partnership and your lawyer tells you that as the owners,you could each stand to lose your personal wealth if the business goes bankrupt.This means a partnership

Accepted Answer

A)  faces limited liability. 
B)  faces unlimited liability. 
C)  has little chance of succeeding. 
D)  is not a good type of business to set up. 
A)  faces limited liability. 
B)  faces unlimited liability. 
C)  has little chance of succeeding. 
D)  is not a good type of business to set up.

Question 3

If a firm has implicit costs as well as explicit costs

Accepted Answer

A)  accounting profits are greater than economic profits. 
B)  economic profits will always be greater than accounting profits. 
C)  accounting profits will be equal to economic profits. 
D)  the firm has no economic profits. 
A)  accounting profits are greater than economic profits. 
B)  economic profits will always be greater than accounting profits. 
C)  accounting profits will be equal to economic profits. 
D)  the firm has no economic profits.

Question 4

Who is the seller in a primary market and who is the seller in a secondary market?

Accepted Answer

The corporation issuing a bond

Question 5

Which type of businesses earns the majority of profits 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 6

Why do corporate boards of directors sometimes link top managers' compensation to the corporations' stock prices? How might tying compensation too closely to stock prices create an incentive for corporate fraud.

Accepted Answer

Corporate boards of directors sometimes

Question 7

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is ________ and the stockholders are ________.

Accepted Answer

A)  the principal; the agents 
B)  the agent; the principals 
C)  an agent; also agents 
D)  a principal; also principals 
A)  the principal; the agents 
B)  the agent; the principals 
C)  an agent; also agents 
D)  a principal; also principals

Question 8

What is a firm's balance sheet?

Accepted Answer

A firm's balance sheet is a fi

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

What is an inside director?

Accepted Answer

A)  a movie director who also appears in the movie 
B)  a member of a corporate board of directors that is also a manager of the business 
C)  the CEO that is selected by the corporation's board of directors 
D)  a board of director chair who has been in the job for at least three years 
A)  a movie director who also appears in the movie 
B)  a member of a corporate board of directors that is also a manager of the business 
C)  the CEO that is selected by the corporation's board of directors 
D)  a board of director chair who has been in the job for at least three years

Question 11

The only type of business that faces limited liability is a partnership.

Accepted Answer

A) True 
 B)False

Question 12

A normal rate of return refers to the ________ that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested.

Accepted Answer

A)  minimum amount 
B)  maximum amount 
C)  total amount 
D)  profit 
A)  minimum amount 
B)  maximum amount 
C)  total amount 
D)  profit

Question 13

The financial statement that sums up a firm's revenues,costs,and profit over a period of time is its

Accepted Answer

A)  income statement. 
B)  balance sheet. 
C)  dividend yield statement. 
D)  price-earnings statement. 
A)  income statement. 
B)  balance sheet. 
C)  dividend yield statement. 
D)  price-earnings statement.

Question 14

Unlike firms that sell stock in financial markets,which are known as ________ firms,companies which do not sell stock in financial markets are known as ________ firms.

Accepted Answer

A)  public; private 
B)  open; closed 
C)  corporate; proprietary 
D)  stock market; bond market 
A)  public; private 
B)  open; closed 
C)  corporate; proprietary 
D)  stock market; bond market

Question 15

When a business is set up as a partnership,the owners of the business face unlimited liability.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true?

Accepted Answer

A)  Corporations can issue stocks and bonds, while proprietorships cannot. 
B)  Corporations have one owner, while proprietorships have many owners. 
C)  Corporations face fewer taxes than do proprietorships. 
D)  Proprietorships have limited liability while corporations have unlimited liability. 
A)  Corporations can issue stocks and bonds, while proprietorships cannot. 
B)  Corporations have one owner, while proprietorships have many owners. 
C)  Corporations face fewer taxes than do proprietorships. 
D)  Proprietorships have limited liability while corporations have unlimited liability.

Question 17

A firm's accounting profit is measured as

Accepted Answer

A)  revenue plus operating expenses minus taxes paid. 
B)  operating expenses minus revenue. 
C)  revenue minus operating expenses and taxes paid. 
D)  net worth minus economic profit. 
A)  revenue plus operating expenses minus taxes paid. 
B)  operating expenses minus revenue. 
C)  revenue minus operating expenses and taxes paid. 
D)  net worth minus economic profit.

Question 18

What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

Accepted Answer

A)  conquest and control 
B)  a financial problem 
C)  a principal-agent problem 
D)  a financial intermediary problem 
A)  conquest and control 
B)  a financial problem 
C)  a principal-agent problem 
D)  a financial intermediary problem

Question 19

Indirect finance refers to the flow of funds from savers to borrowers through financial intermediaries.

Accepted Answer

A) True 
 B)False

Question 20

A bond is a financial security that represents a promise to repay

Accepted Answer

A)  a yearly interest payment only. 
B)  a yearly principal payment only. 
C)  a yearly interest payment and a principal payment. 
D)  Bonds are investments that do not promise any kind of repayment. 
A)  a yearly interest payment only. 
B)  a yearly principal payment only. 
C)  a yearly interest payment and a principal payment. 
D)  Bonds are investments that do not promise any kind of repayment.

How is accounting profit calculated?

Assume you and your best friend set up a partnership and your lawyer tells you that as the owners,you could each stand to lose your personal wealth if the business goes bankrupt.This means a partnership

If a firm has implicit costs as well as explicit costs

Who is the seller in a primary market and who is the seller in a secondary market?

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

Why do corporate boards of directors sometimes link top managers' compensation to the corporations' stock prices? How might tying compensation too closely to stock prices create an incentive for corporate fraud.

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is and the stockholders are .

What is a firm's balance sheet?

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

What is an inside director?

The only type of business that faces limited liability is a partnership.

A normal rate of return refers to the ________ that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested.

The financial statement that sums up a firm's revenues,costs,and profit over a period of time is its

Unlike firms that sell stock in financial markets,which are known as firms,companies which do not sell stock in financial markets are known as firms.

When a business is set up as a partnership,the owners of the business face unlimited liability.

Which of the following statements is true?

A firm's accounting profit is measured as

What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

Indirect finance refers to the flow of funds from savers to borrowers through financial intermediaries.

A bond is a financial security that represents a promise to repay

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

How is accounting profit calculated?

Assume you and your best friend set up a partnership and your lawyer tells you that as the owners,you could each stand to lose your personal wealth if the business goes bankrupt.This means a partnership

If a firm has implicit costs as well as explicit costs

Who is the seller in a primary market and who is the seller in a secondary market?

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

Why do corporate boards of directors sometimes link top managers' compensation to the corporations' stock prices? How might tying compensation too closely to stock prices create an incentive for corporate fraud.

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is ________ and the stockholders are ________.

What is a firm's balance sheet?

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

What is an inside director?

The only type of business that faces limited liability is a partnership.

A normal rate of return refers to the ________ that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested.

The financial statement that sums up a firm's revenues,costs,and profit over a period of time is its

Unlike firms that sell stock in financial markets,which are known as ________ firms,companies which do not sell stock in financial markets are known as ________ firms.

When a business is set up as a partnership,the owners of the business face unlimited liability.

Which of the following statements is true?

A firm's accounting profit is measured as

What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

Indirect finance refers to the flow of funds from savers to borrowers through financial intermediaries.

A bond is a financial security that represents a promise to repay

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

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is and the stockholders are .

Unlike firms that sell stock in financial markets,which are known as firms,companies which do not sell stock in financial markets are known as firms.