Question 1

If a firm has implicit costs as well as explicit costs

Accepted Answer

A) accounting profits are greater than economic profits. 
B) economic profits will always be greater than accounting profits. 
C) accounting profits will be equal to economic profits. 
D) the firm has no economic profits. 
A) accounting profits are greater than economic profits. 
B) economic profits will always be greater than accounting profits. 
C) accounting profits will be equal to economic profits. 
D) the firm has no economic profits.

Question 2

How do the owners of a corporation relate to the business?

Accepted Answer

A) The owners and the business are not separate legal entities. 
B) The owners and the business are separate legal entities. 
C) The assets of the owners are considered the same as the assets of the business. 
D) None of these describe the legal relationship of the owners to the business. 
A) The owners and the business are not separate legal entities. 
B) The owners and the business are separate legal entities. 
C) The assets of the owners are considered the same as the assets of the business. 
D) None of these describe the legal relationship of the owners to the business.

Question 3

When Electronic Arts,the company behind the games Zuma and Plants vs.Zombies,sold stock to the public for the first time in September 1989,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 4

If the personal assets of the owners can be claimed if the business is bankrupt,the owners are said to have

Accepted Answer

A) unlimited liability. 
B) a corporation type of business. 
C) limited liability. 
D) separation of ownership from control. 
A) unlimited liability. 
B) a corporation type of business. 
C) limited liability. 
D) separation of ownership from control.

Question 5

If a corporate bond with face value of $8,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

Accepted Answer

A) $320 
B) $2,000 
C) $8,000 
D) $9,600 
A) $320 
B) $2,000 
C) $8,000 
D) $9,600

Question 6

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 7

Damian wants to start a business where he is the only owner and the company does not issue stock.The type of business Damian wants to start is a

Accepted Answer

A) sole proprietorship. 
B) partnership. 
C) corporation. 
D) Any of the above could be correct. 
A) sole proprietorship. 
B) partnership. 
C) corporation. 
D) Any of the above could be correct.

Question 8

A corporation is limited to how many owners?

Accepted Answer

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

Question 9

Included on the board of directors of Twitter are Debra L.Lee,chairman and chief executive officer of BET Networks,the CEO of 1stdibs.com David Rosenblatt,and MacArthur Foundation chairman Marjorie Scardino.These three board members do not have a direct management role with Twitter and are therefore referred to as

Accepted Answer

A) inside directors. 
B) outside directors. 
C) competitive directors. 
D) honorary directors. 
A) inside directors. 
B) outside directors. 
C) competitive directors. 
D) honorary directors.

Question 10

Generally with bond ratings,the ________ the rating,the higher the interest rate an investor will receive and the ________ the risk that the issuer of the bond will default.

Accepted Answer

A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower 
A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower

Question 11

The only type of business that faces limited liability is a partnership.

Accepted Answer

A) True 
 B)False

Question 12

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 are the implicit costs of her business?

Accepted Answer

A) $14,000 
B) $17,000 
C) $21,000 
D) $31,000 
A) $14,000 
B) $17,000 
C) $21,000 
D) $31,000

Question 13

Assets minus liabilities equals

Accepted Answer

A) accounting profit. 
B) economic profit. 
C) net worth. 
D) implicit costs. 
A) accounting profit. 
B) economic profit. 
C) net worth. 
D) implicit costs.

Question 14

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

Accepted Answer

A) As a sole proprietor,Torrie would be taxed twice. 
B) As a sole proprietor,Torrie would not have control of the business. 
C) As a sole proprietor,Torrie would face unlimited liability. 
D) As a sole proprietor,Torrie would be subject to significant rules and regulations. 
A) As a sole proprietor,Torrie would be taxed twice. 
B) As a sole proprietor,Torrie would not have control of the business. 
C) As a sole proprietor,Torrie would face unlimited liability. 
D) As a sole proprietor,Torrie would be subject to significant rules and regulations.

Question 15

Subprime 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.

Question 16

If the present value equation used to calculate the price of a stock you are considering buying is "[$7 / (0.04 - 0.03)]," which of the following is correct,assuming that dividends will grow at a constant rate?

Accepted Answer

A) The stock price is $7,the dividend growth rate is 3 percent,and the interest rate is 1 percent. 
B) The dividend is $7 per share,the dividend growth rate is 1 percent,and the interest rate is 4 percent. 
C) The stock price is $700,the dividend growth rate is 3 percent,and the interest rate is 4 percent. 
D) The dividend is $7 per share,the dividend growth rate is 4 percent,and the interest rate is 3 percent. 
A) The stock price is $7,the dividend growth rate is 3 percent,and the interest rate is 1 percent. 
B) The dividend is $7 per share,the dividend growth rate is 1 percent,and the interest rate is 4 percent. 
C) The stock price is $700,the dividend growth rate is 3 percent,and the interest rate is 4 percent. 
D) The dividend is $7 per share,the dividend growth rate is 4 percent,and the interest rate is 3 percent.

Question 17

Why is money you receive at some future date worth less to you than money you receive today?

Accepted Answer

Money received at some future date is wo

Question 18

If the face value of a bond is $5,000 and the coupon is $200,what is the interest rate?

Accepted Answer

The interest rate,or coupon ra

Question 19

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

Accepted Answer

The firm's

Question 20

It is the role of ________ to transfer funds from savers to borrowers.

Accepted Answer

A) the Federal Reserve 
B) the federal government 
C) an economy's financial system 
D) corporate governance 
A) the Federal Reserve 
B) the federal government 
C) an economy's financial system 
D) corporate governance

If a firm has implicit costs as well as explicit costs

How do the owners of a corporation relate to the business?

When Electronic Arts,the company behind the games Zuma and Plants vs.Zombies,sold stock to the public for the first time in September 1989,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.

If the personal assets of the owners can be claimed if the business is bankrupt,the owners are said to have

If a corporate bond with face value of $8,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

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

Damian wants to start a business where he is the only owner and the company does not issue stock.The type of business Damian wants to start is a

A corporation is limited to how many owners?

Generally with bond ratings,the the rating,the higher the interest rate an investor will receive and the the risk that the issuer of the bond will default.

The only type of business that faces limited liability is a partnership.

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 are the implicit costs of her business?

Assets minus liabilities equals

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

Subprime mortgages are

If the present value equation used to calculate the price of a stock you are considering buying is "[$7 / (0.04 - 0.03)]," which of the following is correct,assuming that dividends will grow at a constant rate?

Why is money you receive at some future date worth less to you than money you receive today?

If the face value of a bond is $5,000 and the coupon is $200,what is the interest rate?

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

It is the role of ________ to transfer funds from savers to borrowers.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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

If a firm has implicit costs as well as explicit costs

How do the owners of a corporation relate to the business?

When Electronic Arts,the company behind the games Zuma and Plants vs.Zombies,sold stock to the public for the first time in September 1989,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.

If the personal assets of the owners can be claimed if the business is bankrupt,the owners are said to have

If a corporate bond with face value of $8,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

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

Damian wants to start a business where he is the only owner and the company does not issue stock.The type of business Damian wants to start is a

A corporation is limited to how many owners?

Generally with bond ratings,the ________ the rating,the higher the interest rate an investor will receive and the ________ the risk that the issuer of the bond will default.

The only type of business that faces limited liability is a partnership.

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 are the implicit costs of her business?

Assets minus liabilities equals

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

Subprime mortgages are

If the present value equation used to calculate the price of a stock you are considering buying is "[$7 / (0.04 - 0.03)]," which of the following is correct,assuming that dividends will grow at a constant rate?

Why is money you receive at some future date worth less to you than money you receive today?

If the face value of a bond is $5,000 and the coupon is $200,what is the interest rate?

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

It is the role of ________ to transfer funds from savers to borrowers.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

When Electronic Arts,the company behind the games Zuma and Plants vs.Zombies,sold stock to the public for the first time in September 1989,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.

Generally with bond ratings,the the rating,the higher the interest rate an investor will receive and the the risk that the issuer of the bond will default.