Question 1

A partnership is ________ type of business.

Accepted Answer

A)  the most common 
B)  the least common 
C)  the least risky 
D)  the most profitable 
A)  the most common 
B)  the least common 
C)  the least risky 
D)  the most profitable

Question 2

In a partnership,the owners of the business and the business are ________,and in a sole proprietorship,the owner of the business and the business are ________.

Accepted Answer

A)  separate legal entities; also separate legal entities 
B)  not separate legal entities; also not separate legal entities 
C)  not separate legal entities; separate legal entities 
D)  separate legal entities; not separate legal entities 
A)  separate legal entities; also separate legal entities 
B)  not separate legal entities; also not separate legal entities 
C)  not separate legal entities; separate legal entities 
D)  separate legal entities; not separate legal entities

Question 3

With respect to business types,what does the term 'limited liability' mean?

Accepted Answer

Limited liability is a legal provision t

Question 4

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She is considering setting up her business as a corporation.What is one advantage to Torrie of setting up her business as a corporation?

Accepted Answer

A)  By setting up the business as a corporation, Torrie would not face double taxation. 
B)  By setting up the business as a corporation, Torrie would have the ability to share risk with shareholders. 
C)  By setting up the business as a corporation, Torrie would have both ownership and control over the business. 
D)  All of the above would be advantages of setting up her business as a corporation. 
A)  By setting up the business as a corporation, Torrie would not face double taxation. 
B)  By setting up the business as a corporation, Torrie would have the ability to share risk with shareholders. 
C)  By setting up the business as a corporation, Torrie would have both ownership and control over the business. 
D)  All of the above would be advantages of setting up her business as a corporation.

Question 5

Despite a shaky start, online used car seller Carvana sold all 15 million stock shares in its IPO and raised about $225 million. Initially priced at $15 per share, the stock closed at $11.10 per share at the end of the first trading day. The Phoenix-based company, known for its automated car vending machines, offers free next-day delivery to residents in 24 markets across the United States. Carvana, founded in 2012, has seen large revenue growth but has never reported a profit., losing about $93 million in 2016. The company also said in its S-1 IPO filing that it expects losses to continue in the near future.
Source: Kirsten Korosec, "Used Car Vending Machine IPO Sputters In First Day of Trading," Fortune, April 28, 2017.
-When Carvana sold stock to the public in its IPO,it did so through the New York Stock Exchange.People who bought the shares

Accepted Answer

A)  were promised to be repaid their investment plus interest. 
B)  did so in the indirect finance market. 
C)  own part of the company. 
D)  All of the above are true. 
A)  were promised to be repaid their investment plus interest. 
B)  did so in the indirect finance market. 
C)  own part of the company. 
D)  All of the above are true.

Question 6

A higher bond price indicates a lower cost of new external funds.

Accepted Answer

A) True 
 B)False

Question 7

Indirect finance includes the sale by a corporation of stocks or bonds,as well as borrowing money from a bank.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  reduce the principal-agent problem. 
B)  increase the principal-agent problem. 
C)  be in the best interest of shareholders. 
D)  have no impact on the company's performance, since the CEO is only one member of top management. 
A)  reduce the principal-agent problem. 
B)  increase the principal-agent problem. 
C)  be in the best interest of shareholders. 
D)  have no impact on the company's performance, since the CEO is only one member of top management.

Question 9

A ________ is owned by its stockholders.

Accepted Answer

A)  sole proprietorship 
B)  corporation 
C)  partnership 
D)  All of the above are correct. 
A)  sole proprietorship 
B)  corporation 
C)  partnership 
D)  All of the above are correct.

Question 10

When an investor buys a corporate bond,the face value of the bond is

Accepted Answer

A)  a measure of ownership in the corporation. 
B)  a loan to the corporation. 
C)  the coupon rate of the bond. 
D)  a dividend payment on the bond. 
A)  a measure of ownership in the corporation. 
B)  a loan to the corporation. 
C)  the coupon rate of the bond. 
D)  a dividend payment on the bond.

Question 11

In response to accounting scandals in 2002,the federal government passed legislation requiring that corporate directors have a certain level of expertise with financial information and mandating that chief executive officers personally certify the accuracy of financial statements.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 12

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

Accepted Answer

A)  rent paid to a landlord. 
B)  bonuses paid to employees. 
C)  a normal rate of return for investors. 
D)  corporate income taxes. 
A)  rent paid to a landlord. 
B)  bonuses paid to employees. 
C)  a normal rate of return for investors. 
D)  corporate income taxes.

Question 13

Satya Nadella is the Chief Executive Officer of Microsoft as well as a member of Microsoft's board of directors.Nadella is therefore classified as an

Accepted Answer

A)  inside director. 
B)  outside director. 
C)  independent director. 
D)  unbiased director. 
A)  inside director. 
B)  outside director. 
C)  independent director. 
D)  unbiased director.

Question 14

Sole proprietorships are ________ type of business.

Accepted Answer

A)  the most profitable 
B)  the least common 
C)  the most common 
D)  the least risky 
A)  the most profitable 
B)  the least common 
C)  the most common 
D)  the least risky

Question 15

The interest payment on a bond is called a face value payment.

Accepted Answer

A) True 
 B)False

Question 16

Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs.The company earns $1.4 million in revenues and has $3.7 million in net worth.Based on this information,what is the economic profit for Harry's Hookahs?

Accepted Answer

A)  $200,000 
B)  $700,000 
C)  $900,000 
D)  $1.1 million 
A)  $200,000 
B)  $700,000 
C)  $900,000 
D)  $1.1 million

A partnership is ________ type of business.

In a partnership,the owners of the business and the business are ,and in a sole proprietorship,the owner of the business and the business are .

With respect to business types,what does the term 'limited liability' mean?

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She is considering setting up her business as a corporation.What is one advantage to Torrie of setting up her business as a corporation?

A higher bond price indicates a lower cost of new external funds.

Indirect finance includes the sale by a corporation of stocks or bonds,as well as borrowing money from a bank.

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

A ________ is owned by its stockholders.

When an investor buys a corporate bond,the face value of the bond is

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

Satya Nadella is the Chief Executive Officer of Microsoft as well as a member of Microsoft's board of directors.Nadella is therefore classified as an

Sole proprietorships are ________ type of business.

The interest payment on a bond is called a face value payment.

Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs.The company earns $1.4 million in revenues and has $3.7 million in net worth.Based on this information,what is the economic profit for Harry's Hookahs?

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

A partnership is ________ type of business.

In a partnership,the owners of the business and the business are ________,and in a sole proprietorship,the owner of the business and the business are ________.

With respect to business types,what does the term 'limited liability' mean?

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She is considering setting up her business as a corporation.What is one advantage to Torrie of setting up her business as a corporation?

A higher bond price indicates a lower cost of new external funds.

Indirect finance includes the sale by a corporation of stocks or bonds,as well as borrowing money from a bank.

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

A ________ is owned by its stockholders.

When an investor buys a corporate bond,the face value of the bond is

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

Satya Nadella is the Chief Executive Officer of Microsoft as well as a member of Microsoft's board of directors.Nadella is therefore classified as an

Sole proprietorships are ________ type of business.

The interest payment on a bond is called a face value payment.

Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs.The company earns $1.4 million in revenues and has $3.7 million in net worth.Based on this information,what is the economic profit for Harry's Hookahs?

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

In a partnership,the owners of the business and the business are ,and in a sole proprietorship,the owner of the business and the business are .