Question 1

If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40,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

Dividing the dividend payment by the stock's closing market price determines the

Accepted Answer

A)  coupon payment. 
B)  dividend yield. 
C)  price-earnings ratio. 
D)  selling price of the stock. 
A)  coupon payment. 
B)  dividend yield. 
C)  price-earnings ratio. 
D)  selling price of the stock.

Question 3

In a typical year,new small firms create ________ jobs.

Accepted Answer

A)  250,000 
B)  1.1 million 
C)  1.8 million 
D)  3.3 million 
A)  250,000 
B)  1.1 million 
C)  1.8 million 
D)  3.3 million

Question 4

As a form of business,a partnership

Accepted Answer

A)  has limited liability. 
B)  has only one owner. 
C)  cannot issue stock. 
D)  has the most government rules and regulations affecting it. 
A)  has limited liability. 
B)  has only one owner. 
C)  cannot issue stock. 
D)  has the most government rules and regulations affecting it.

Question 5

Which of the following is the most important of the over-the-counter markets?

Accepted Answer

A)  New York Stock Exchange 
B)  the S&P 500 
C)  the NASDAQ Composite Index 
D)  the Chicago Mercantile Exchange 
A)  New York Stock Exchange 
B)  the S&P 500 
C)  the NASDAQ Composite Index 
D)  the Chicago Mercantile Exchange

Question 6

Which of the following is one of the most widely followed stock indexes in the United States?

Accepted Answer

A)  the Dow Jones Industrial Average 
B)  the Chicago Mercantile Exchange 
C)  the Fortune 500 
D)  the Securities and Exchange Commission 
A)  the Dow Jones Industrial Average 
B)  the Chicago Mercantile Exchange 
C)  the Fortune 500 
D)  the Securities and Exchange Commission

Question 7

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 8

What is the difference between buying stocks and buying bonds?

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)  All of these are differences between stocks and bonds. 
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)  All of these are differences between stocks and bonds.

Question 9

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 10

Which of the following is true?

Accepted Answer

A)  A firm's accounting profit is equal to its economic profit. 
B)  Opportunity costs are the same as explicit costs. 
C)  A firm's net income is the same as its accounting profit. 
D)  If a firm's accounting profits are positive, its economic profits must also be positive. 
A)  A firm's accounting profit is equal to its economic profit. 
B)  Opportunity costs are the same as explicit costs. 
C)  A firm's net income is the same as its accounting profit. 
D)  If a firm's accounting profits are positive, its economic profits must also be positive.

Question 11

What takes place in the indirect finance market?

Accepted Answer

A)  Part ownership of corporations is sold in the form of stocks. 
B)  Corporate and government bonds are sold to savers. 
C)  Deposits of savers are accepted and lent to borrowers. 
D)  Government purchases of buildings and equipment are sold to the highest bidder. 
A)  Part ownership of corporations is sold in the form of stocks. 
B)  Corporate and government bonds are sold to savers. 
C)  Deposits of savers are accepted and lent to borrowers. 
D)  Government purchases of buildings and equipment are sold to the highest bidder.

Question 12

Who selects the board of directors of a corporation?

Accepted Answer

A)  the state where the corporation is chartered 
B)  employees 
C)  stockholders 
D)  managers 
A)  the state where the corporation is chartered 
B)  employees 
C)  stockholders 
D)  managers

Question 13

How does a firm raise external funds through direct finance?

Accepted Answer

With direct finance,funds flow

Question 14

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 15

Who decides control of a corporation?

Accepted Answer

Stockholders elect a

Question 16

What happens in the secondary market?

Accepted Answer

A)  secondary inputs like electricity are sold 
B)  a corporate financial manager will raise funds for expansion of the firm 
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)  secondary inputs like electricity are sold 
B)  a corporate financial manager will raise funds for expansion of the firm 
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 17

A corporation's management

Accepted Answer

A)  owns the corporation. 
B)  hires the board of directors. 
C)  is liable for the corporation's debts. 
D)  operates and controls a corporation in its day-to-day activities. 
A)  owns the corporation. 
B)  hires the board of directors. 
C)  is liable for the corporation's debts. 
D)  operates and controls a corporation in its day-to-day activities.

Question 18

Corporate managers and shareholders always have the same goals.

Accepted Answer

A) True 
 B)False

Question 19

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 are the implicit costs of her business?

Accepted Answer

A)  $12,000 
B)  $30,000 
C)  $72,000 
D)  $86,000 
A)  $12,000 
B)  $30,000 
C)  $72,000 
D)  $86,000

Question 20

Securities dealers that trade stocks and bonds outside exchanges comprise the

Accepted Answer

A)  foreign exchange market. 
B)  over-the-counter market. 
C)  NASDAQ market. 
D)  outlet market. 
A)  foreign exchange market. 
B)  over-the-counter market. 
C)  NASDAQ market. 
D)  outlet market.

If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40,what is the coupon rate?

Dividing the dividend payment by the stock's closing market price determines the

In a typical year,new small firms create ________ jobs.

As a form of business,a partnership

Which of the following is the most important of the over-the-counter markets?

Which of the following is one of the most widely followed stock indexes in the United States?

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?

What is the difference between buying stocks and buying bonds?

The financial statements of firms generally are audited by

Which of the following is true?

What takes place in the indirect finance market?

Who selects the board of directors of a corporation?

How does a firm raise external funds through direct finance?

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

Who decides control of a corporation?

What happens in the secondary market?

A corporation's management

Corporate managers and shareholders always have the same goals.

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 are the implicit costs of her business?

Securities dealers that trade stocks and bonds outside exchanges comprise the

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

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Exam 6: Firms, The Stock Market, and Corporate Governance

If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40,what is the coupon rate?

Dividing the dividend payment by the stock's closing market price determines the

In a typical year,new small firms create ________ jobs.

As a form of business,a partnership

Which of the following is the most important of the over-the-counter markets?

Which of the following is one of the most widely followed stock indexes in the United States?

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?

What is the difference between buying stocks and buying bonds?

The financial statements of firms generally are audited by

Which of the following is true?

What takes place in the indirect finance market?

Who selects the board of directors of a corporation?

How does a firm raise external funds through direct finance?

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

Who decides control of a corporation?

What happens in the secondary market?

A corporation's management

Corporate managers and shareholders always have the same goals.

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 are the implicit costs of her business?

Securities dealers that trade stocks and bonds outside exchanges comprise the

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