Question 1

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

Accepted Answer

Corporations have li

Question 2

The interest rate on a bond is calculated as

Accepted Answer

A)  the coupon divided by the face value. 
B)  the coupon times the face value. 
C)  the face value divided by the coupon. 
D)  the face value divided by the coupon plus the face value. 
A)  the coupon divided by the face value. 
B)  the coupon times the face value. 
C)  the face value divided by the coupon. 
D)  the face value divided by the coupon plus the face value.

Question 3

How do firms raise external funds through indirect finance?

Accepted Answer

With indirect finance,funds fl

Question 4

The owner or owners control the day-to-day activities of which of the following types of business?

Accepted Answer

A)  corporations and partnerships 
B)  partnerships and sole proprietorships 
C)  sole proprietorships and corporations 
D)  only corporations 
A)  corporations and partnerships 
B)  partnerships and sole proprietorships 
C)  sole proprietorships and corporations 
D)  only corporations

Question 5

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

Accepted Answer

A)  You are liable for organizing the business. 
B)  You could stand to lose your personal wealth if the business goes bankrupt. 
C)  There is no legal responsibility of the business in case a customer sues, as the business is legally untouchable. 
D)  None of these explain what unlimited liability means. 
A)  You are liable for organizing the business. 
B)  You could stand to lose your personal wealth if the business goes bankrupt. 
C)  There is no legal responsibility of the business in case a customer sues, as the business is legally untouchable. 
D)  None of these explain what unlimited liability means.

Question 6

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50,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 7

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 8

Who controls a sole proprietorship?

Accepted Answer

A)  stockholders 
B)  bondholders 
C)  the owner 
D)  all of these 
A)  stockholders 
B)  bondholders 
C)  the owner 
D)  all of these

Question 9

In response to accounting scandals in 2002,the federal government passed legislation requiring,among other things,that auditors disclose any potential conflicts of interest.What is the name of this legislation?

Accepted Answer

A)  the Accountant Reliability Act 
B)  the 24th amendment to the Constitution 
C)  the Kennedy-Lott Act 
D)  the Sarbanes-Oxley Act 
A)  the Accountant Reliability Act 
B)  the 24th amendment to the Constitution 
C)  the Kennedy-Lott Act 
D)  the Sarbanes-Oxley Act

Question 10

A sole proprietorship is limited to how many owners?

Accepted Answer

A)  1 
B)  2 
C)  10 
D)  There is no limit to the number of owners. 
A)  1 
B)  2 
C)  10 
D)  There is no limit to the number of owners.

Question 11

What does it mean to say there is a separation of ownership from control in large corporations?

Accepted Answer

Shares of stock represent partial owners

Question 12

Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year,the explicit costs of her business are $17,000,and the opportunity costs of her business are $22,000.What is her economic profit?

Accepted Answer

A)  $17,000 
B)  $25,000 
C)  $42,000 
D)  $47,000 
A)  $17,000 
B)  $25,000 
C)  $42,000 
D)  $47,000

Question 13

If a corporation goes bankrupt,bondholders have ________ on the firm's assets.

Accepted Answer

A)  no claim 
B)  third claim, after the IRS and stockholders, 
C)  second claim, after stockholders, 
D)  first claim 
A)  no claim 
B)  third claim, after the IRS and stockholders, 
C)  second claim, after stockholders, 
D)  first claim

Question 14

Why do corporations want to keep the price of their stock high?

Accepted Answer

A)  A higher stock price increases the funds the firm can raise when it sells a given amount of stock. 
B)  Corporations can pay their managers lower salaries and avoid principal-agent problems when stock prices are higher. 
C)  Higher stock prices are correlated with lower expected profitability. 
D)  All of the above provide incentive for corporations to keep the price of their stock high. 
A)  A higher stock price increases the funds the firm can raise when it sells a given amount of stock. 
B)  Corporations can pay their managers lower salaries and avoid principal-agent problems when stock prices are higher. 
C)  Higher stock prices are correlated with lower expected profitability. 
D)  All of the above provide incentive for corporations to keep the price of their stock high.

Question 15

Accounting profit is the sum of a firm's revenue and its opportunity costs.

Accepted Answer

A) True 
 B)False

Question 16

A financial statement that sums up a firm's financial position on a particular day is

Accepted Answer

A)  a balance sheet. 
B)  an income statement. 
C)  statement of cash flow. 
D)  an equity report. 
A)  a balance sheet. 
B)  an income statement. 
C)  statement of cash flow. 
D)  an equity report.

Question 17

Traditionally,Wall Street investment banks had been organized as ________,but by 2000 they had converted to being ________.

Accepted Answer

A)  partnerships; publicly-traded companies 
B)  sole proprietorships; partnerships 
C)  corporations; partnerships 
D)  partnerships; sole proprietorships 
A)  partnerships; publicly-traded companies 
B)  sole proprietorships; partnerships 
C)  corporations; partnerships 
D)  partnerships; sole proprietorships

Question 18

Veruca sells therapeutic bath salts on the Internet.Her annual revenue is $52,000 per year,the explicit costs of her business are $14,000,and the opportunity costs of her business are $17,000 per year.What is her accounting profit?

Accepted Answer

A)  $14,000 
B)  $21,000 
C)  $31,000 
D)  $38,000 
A)  $14,000 
B)  $21,000 
C)  $31,000 
D)  $38,000

Question 19

Dividends are

Accepted Answer

A)  financial securities which represent ownership in a corporation. 
B)  the yearly payments associated with bonds. 
C)  the interest rate paid on shares of stock. 
D)  payments by a corporation to its shareholders. 
A)  financial securities which represent ownership in a corporation. 
B)  the yearly payments associated with bonds. 
C)  the interest rate paid on shares of stock. 
D)  payments by a corporation to its shareholders.

Question 20

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 economic 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

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

The interest rate on a bond is calculated as

How do firms raise external funds through indirect finance?

The owner or owners control the day-to-day activities of which of the following types of business?

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50,what is the coupon rate?

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.

Who controls a sole proprietorship?

In response to accounting scandals in 2002,the federal government passed legislation requiring,among other things,that auditors disclose any potential conflicts of interest.What is the name of this legislation?

A sole proprietorship is limited to how many owners?

What does it mean to say there is a separation of ownership from control in large corporations?

Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year,the explicit costs of her business are $17,000,and the opportunity costs of her business are $22,000.What is her economic profit?

If a corporation goes bankrupt,bondholders have ________ on the firm's assets.

Why do corporations want to keep the price of their stock high?

Accounting profit is the sum of a firm's revenue and its opportunity costs.

A financial statement that sums up a firm's financial position on a particular day is

Traditionally,Wall Street investment banks had been organized as ,but by 2000 they had converted to being .

Veruca sells therapeutic bath salts on the Internet.Her annual revenue is $52,000 per year,the explicit costs of her business are $14,000,and the opportunity costs of her business are $17,000 per year.What is her accounting profit?

Dividends are

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 economic profit?

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

The interest rate on a bond is calculated as

How do firms raise external funds through indirect finance?

The owner or owners control the day-to-day activities of which of the following types of business?

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50,what is the coupon rate?

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.

Who controls a sole proprietorship?

In response to accounting scandals in 2002,the federal government passed legislation requiring,among other things,that auditors disclose any potential conflicts of interest.What is the name of this legislation?

A sole proprietorship is limited to how many owners?

What does it mean to say there is a separation of ownership from control in large corporations?

Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year,the explicit costs of her business are $17,000,and the opportunity costs of her business are $22,000.What is her economic profit?

If a corporation goes bankrupt,bondholders have ________ on the firm's assets.

Why do corporations want to keep the price of their stock high?

Accounting profit is the sum of a firm's revenue and its opportunity costs.

A financial statement that sums up a firm's financial position on a particular day is

Traditionally,Wall Street investment banks had been organized as ________,but by 2000 they had converted to being ________.

Veruca sells therapeutic bath salts on the Internet.Her annual revenue is $52,000 per year,the explicit costs of her business are $14,000,and the opportunity costs of her business are $17,000 per year.What is her accounting profit?

Dividends are

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 economic profit?

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

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.

Traditionally,Wall Street investment banks had been organized as ,but by 2000 they had converted to being .