Question 1

A nonmonetary opportunity cost is called a(n)________,while a cost that involves spending money is called a(n)________.

Accepted Answer

A)  accounting cost; explicit cost 
B)  implicit cost; explicit cost 
C)  accounting profit; economic profit 
D)  normal rate of return; asset 
A)  accounting cost; explicit cost 
B)  implicit cost; explicit cost 
C)  accounting profit; economic profit 
D)  normal rate of return; asset

Question 2

Of the types of business organizations in the United States,corporations account for ________ percentage of revenues and ________ percentage of profits.

Accepted Answer

A)  the smallest; the largest 
B)  largest; neither the largest nor smallest 
C)  neither the largest nor smallest; the largest 
D)  the largest; the largest 
A)  the smallest; the largest 
B)  largest; neither the largest nor smallest 
C)  neither the largest nor smallest; the largest 
D)  the largest; the largest

Question 3

When you buy previously issued shares of Snap stock,this transaction takes place in the

Accepted Answer

A)  primary market. 
B)  bond market. 
C)  secondary market. 
D)  bear market. 
A)  primary market. 
B)  bond market. 
C)  secondary market. 
D)  bear market.

Question 4

A firm's net income is also its accounting profit.

Accepted Answer

A) True 
 B)False

Question 5

Briefly describe the three most widely followed stock indexes in the United States.

Accepted Answer

1∙The Dow Jones Industrial Average,which

Question 6

Payments by a corporation to its shareholders are known as

Accepted Answer

A)  stocks. 
B)  bonds. 
C)  coupons. 
D)  dividends. 
A)  stocks. 
B)  bonds. 
C)  coupons. 
D)  dividends.

Question 7

If a firm has implicit costs as well as explicit costs

Accepted Answer

A)  net income will always be less than accounting profit. 
B)  accounting profit will be zero. 
C)  net income will always be greater than accounting profit. 
D)  economic profit will be less than accounting profit. 
A)  net income will always be less than accounting profit. 
B)  accounting profit will be zero. 
C)  net income will always be greater than accounting profit. 
D)  economic profit will be less than accounting profit.

Question 8

What role do well-functioning financial markets play in a market economy?

Accepted Answer

They allocate saved

Question 9

Limited personal liability is an advantage for

Accepted Answer

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

Question 10

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

Accepted Answer

A)  If the retained earnings are expected to create future profits, the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold. 
B)  Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments. 
C)  Owners will only benefit if some profits are paid out in the form of dividends. 
D)  Owners will benefit by changing the board of directors. 
A)  If the retained earnings are expected to create future profits, the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold. 
B)  Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments. 
C)  Owners will only benefit if some profits are paid out in the form of dividends. 
D)  Owners will benefit by changing the board of directors.

Question 11

In the United States,sole proprietorship profits are taxed at the business level and then are taxed again as personal income in the form of dividend payments.

Accepted Answer

A) True 
 B)False

Question 12

Raising funds through ________ is called indirect finance.

Accepted Answer

A)  issuing stock 
B)  issuing bonds 
C)  financial intermediaries 
D)  retaining earnings 
A)  issuing stock 
B)  issuing bonds 
C)  financial intermediaries 
D)  retaining earnings

Question 13

If a corporation's retained earnings are expected to create future profits,the market price of the firm's stock will ________ and create a ________ for stockholders if the stock is sold.

Accepted Answer

A)  increase; capital gain 
B)  decrease; capital gain 
C)  increase; loss of wealth 
D)  decrease; loss of wealth 
A)  increase; capital gain 
B)  decrease; capital gain 
C)  increase; loss of wealth 
D)  decrease; loss of wealth

Question 14

An increase in liabilities will reduce a firm's net worth.

Accepted Answer

A) True 
 B)False

Question 15

If you purchase a share of stock from your friend who initially purchased the stock three years ago,your purchase of the stock represents a transaction in the secondary financial market.

Accepted Answer

A) True 
 B)False

Question 16

The possible double taxation of income is a disadvantage for

Accepted Answer

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

Question 17

The rules of accounting generally require that ________ be included in a firm's financial records.

Accepted Answer

A)  only implicit costs 
B)  only explicit costs 
C)  both explicit costs and implicit costs 
D)  neither explicit costs nor implicit costs 
A)  only implicit costs 
B)  only explicit costs 
C)  both explicit costs and implicit costs 
D)  neither explicit costs nor implicit costs

Question 18

What is an income statement?

Accepted Answer

An income statement is a finan

Question 19

In addition to requiring that CEOs personally certify the accuracy of financial statements,the Sarbanes-Oxley Act of 2002 also requires that

Accepted Answer

A)  CEO's conduct audits of their corporations themselves. 
B)  firms raise funds for expansion through the sale of bonds only, not stocks. 
C)  auditors disclose any potential conflicts of interest. 
D)  corporations issue financial statements monthly rather than quarterly. 
A)  CEO's conduct audits of their corporations themselves. 
B)  firms raise funds for expansion through the sale of bonds only, not stocks. 
C)  auditors disclose any potential conflicts of interest. 
D)  corporations issue financial statements monthly rather than quarterly.

Question 20

Alt-A mortgages are

Accepted Answer

A)  mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages. 
B)  mortgages which are bundled together by financial institutions and sold to investors. 
C)  mortgages issued to borrowers with flawed credit histories. 
D)  government-backed mortgages issued by Fannie Mae and Freddie Mac. 
A)  mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages. 
B)  mortgages which are bundled together by financial institutions and sold to investors. 
C)  mortgages issued to borrowers with flawed credit histories. 
D)  government-backed mortgages issued by Fannie Mae and Freddie Mac.

A nonmonetary opportunity cost is called a(n),while a cost that involves spending money is called a(n).

Of the types of business organizations in the United States,corporations account for percentage of revenues and percentage of profits.

When you buy previously issued shares of Snap stock,this transaction takes place in the

A firm's net income is also its accounting profit.

Briefly describe the three most widely followed stock indexes in the United States.

Payments by a corporation to its shareholders are known as

If a firm has implicit costs as well as explicit costs

What role do well-functioning financial markets play in a market economy?

Limited personal liability is an advantage for

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

In the United States,sole proprietorship profits are taxed at the business level and then are taxed again as personal income in the form of dividend payments.

Raising funds through ________ is called indirect finance.

If a corporation's retained earnings are expected to create future profits,the market price of the firm's stock will and create a for stockholders if the stock is sold.

An increase in liabilities will reduce a firm's net worth.

If you purchase a share of stock from your friend who initially purchased the stock three years ago,your purchase of the stock represents a transaction in the secondary financial market.

The possible double taxation of income is a disadvantage for

The rules of accounting generally require that ________ be included in a firm's financial records.

What is an income statement?

In addition to requiring that CEOs personally certify the accuracy of financial statements,the Sarbanes-Oxley Act of 2002 also requires that

Alt-A mortgages are

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 nonmonetary opportunity cost is called a(n)________,while a cost that involves spending money is called a(n)________.

Of the types of business organizations in the United States,corporations account for ________ percentage of revenues and ________ percentage of profits.

When you buy previously issued shares of Snap stock,this transaction takes place in the

A firm's net income is also its accounting profit.

Briefly describe the three most widely followed stock indexes in the United States.

Payments by a corporation to its shareholders are known as

If a firm has implicit costs as well as explicit costs

What role do well-functioning financial markets play in a market economy?

Limited personal liability is an advantage for

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

In the United States,sole proprietorship profits are taxed at the business level and then are taxed again as personal income in the form of dividend payments.

Raising funds through ________ is called indirect finance.

If a corporation's retained earnings are expected to create future profits,the market price of the firm's stock will ________ and create a ________ for stockholders if the stock is sold.

An increase in liabilities will reduce a firm's net worth.

If you purchase a share of stock from your friend who initially purchased the stock three years ago,your purchase of the stock represents a transaction in the secondary financial market.

The possible double taxation of income is a disadvantage for

The rules of accounting generally require that ________ be included in a firm's financial records.

What is an income statement?

In addition to requiring that CEOs personally certify the accuracy of financial statements,the Sarbanes-Oxley Act of 2002 also requires that

Alt-A mortgages are

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

A nonmonetary opportunity cost is called a(n),while a cost that involves spending money is called a(n).

Of the types of business organizations in the United States,corporations account for percentage of revenues and percentage of profits.

If a corporation's retained earnings are expected to create future profits,the market price of the firm's stock will and create a for stockholders if the stock is sold.