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

Direct finance refers to the flow of funds from savers to borrowers through financial markets.

If you own a $1,000 face value bond with one year remaining to maturity and a 3 percent coupon rate and new bonds are paying 9 percent,what is the most you can get for your old bond today?

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

If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent,American Airlines would pay you

All of the following take place in the direct finance market except

Dividends are the interest rates paid on stocks.

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?

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?

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?

The higher the default risk on a bond,the higher the interest rate will be.

What is an outside director?

You have a bond that pays $18 per year in coupon payments.Which of the following would result in a decrease in the price of your bond?

Gross revenue minus explicit and implicit costs is equal to

Which of the following would be considered an implicit cost of operating a business?

A firm's accounting profit is measured as

Julie is the chief executive officer (CEO)of the Black Gold Corporation and is also on the company's board of directors.Julie is considered ________ of the corporation.

Javier wants to start a microbrewery business and is thinking of setting it up as a sole proprietorship.What are the advantages and disadvantages he will face by setting up the business as a sole proprietorship as opposed to a partnership or a corporation?

Bonds ________ and stocks ________.

What is an income statement?

The ________ a corporation keeps to finance future expansion are known as retained earnings.