Question 1

A bond is a financial security that represents a promise to repay

Accepted Answer

A) a yearly interest payment only. 
B) a yearly principal payment only. 
C) a yearly interest payment and a principal payment. 
D) Bonds are investments that do not promise any kind of repayment. 
A) a yearly interest payment only. 
B) a yearly principal payment only. 
C) a yearly interest payment and a principal payment. 
D) Bonds are investments that do not promise any kind of repayment.

Question 2

When the coupon rate on newly issued bonds ________ relative to older,outstanding bonds,the market price of the older bond ________.

Accepted Answer

A) increases; falls in the secondary market 
B) increases; rises in the secondary market 
C) decreases; falls in the secondary market 
D) decreases; falls in the primary market 
A) increases; falls in the secondary market 
B) increases; rises in the secondary market 
C) decreases; falls in the secondary market 
D) decreases; falls in the primary market

Question 3

What is the present value of $960 in one year if the current rate of interest is 6 percent?

Accepted Answer

A) $676.76 
B) $905.66 
C) $1,017.60 
D) $1,449.46 
A) $676.76 
B) $905.66 
C) $1,017.60 
D) $1,449.46

Question 4

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 5

Unlimited personal liability 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 6

Mortgage-backed securities are similar to bonds in that the investor who buys one receives

Accepted Answer

A) federal insurance to cover the value of the security. 
B) partial ownership of the company that issued the security. 
C) dividend payments. 
D) regular interest payments. 
A) federal insurance to cover the value of the security. 
B) partial ownership of the company that issued the security. 
C) dividend payments. 
D) regular interest payments.

Question 7

Tommy's Teddy Bears incurs $300,000 per year in explicit costs and $50,000 in implicit costs.The shop earns $600,000 in revenues and has $1.1 million in net worth.Based on this information,what is economic profit for Tommy's Teddy Bears?

Accepted Answer

A) $250,000 
B) $300,000 
C) $500,000 
D) $1.35 million 
A) $250,000 
B) $300,000 
C) $500,000 
D) $1.35 million

Question 8

Describe the three main categories of firms.

Accepted Answer

The three main types of firms are sole p

Question 9

Gross revenue minus explicit costs equals

Accepted Answer

A) accounting profit. 
B) economic profit. 
C) opportunity cost. 
D) implicit cost. 
A) accounting profit. 
B) economic profit. 
C) opportunity cost. 
D) implicit cost.

Question 10

From the highest to the lowest,the percentage of profits earned by businesses in the United States is represented by which of the following?

Accepted Answer

A) sole proprietorships,partnerships,corporations 
B) partnerships,corporations,sole proprietorships 
C) corporations,partnerships,sole proprietorships 
D) corporations,sole proprietorships,partnerships 
A) sole proprietorships,partnerships,corporations 
B) partnerships,corporations,sole proprietorships 
C) corporations,partnerships,sole proprietorships 
D) corporations,sole proprietorships,partnerships

Question 11

Yolanda wants to expand her microbrewery business by buying out a competitor and is going to sell newly-issued corporate bonds to do so.This is an example of using ________ for her expansion plans.

Accepted Answer

A) direct finance 
B) indirect finance 
C) coupon payments 
D) retained earnings 
A) direct finance 
B) indirect finance 
C) coupon payments 
D) retained earnings

Question 12

Dividends are

Accepted Answer

A) the interest payments on bonds. 
B) the principal payments on bonds. 
C) fixed payments to bondholders. 
D) payments by a corporation to its shareholders. 
A) the interest payments on bonds. 
B) the principal payments on bonds. 
C) fixed payments to bondholders. 
D) payments by a corporation to its shareholders.

Question 13

A firm's managers need information on the firm's revenue and costs as well as information on the value of a firm's assets and the amount of the firm's debts to answer three basic questions.Which of the following is not one of those three basic questions?

Accepted Answer

A) What to produce? 
B) How to produce it? 
C) What price to charge? 
D) Where to produce? 
A) What to produce? 
B) How to produce it? 
C) What price to charge? 
D) Where to produce?

Question 14

Profits that are reinvested in a firm rather than paid to the firm's owners are called

Accepted Answer

A) dividends. 
B) stock options. 
C) retained earnings. 
D) corporate bonds. 
A) dividends. 
B) stock options. 
C) retained earnings. 
D) corporate bonds.

Question 15

The Aristocrat Corporation has taken out a loan to buy manufacturing equipment.The loan represents ________ for the company.

Accepted Answer

A) an asset 
B) a liability 
C) a bond 
D) equity 
A) an asset 
B) a liability 
C) a bond 
D) equity

Question 16

The shareholders of a corporation

Accepted Answer

A) are inside directors of the corporation. 
B) are only comprised of top management for a large corporation. 
C) directly manage the corporation. 
D) elect a board of directors to represent their interests. 
A) are inside directors of the corporation. 
B) are only comprised of top management for a large corporation. 
C) directly manage the corporation. 
D) elect a board of directors to represent their interests.

Question 17

Snap became the first firm in the history of U.S.financial markets to have an IPO that consisted entirely of non-voting shares.

Accepted Answer

A) True 
 B)False

Question 18

What does unlimited liability mean?

Accepted Answer

A) The owners of the business are personally responsible for paying expenses incurred by the business. 
B) Only employees can have a claim on the assets of the business. 
C) The personal assets of the owners cannot be claimed if the business is bankrupt. 
D) Anybody with a liability against a firm can claim up to three times their liability. 
A) The owners of the business are personally responsible for paying expenses incurred by the business. 
B) Only employees can have a claim on the assets of the business. 
C) The personal assets of the owners cannot be claimed if the business is bankrupt. 
D) Anybody with a liability against a firm can claim up to three times their liability.

Question 19

The person hired by a corporation's board of directors to ________ is known as the chief executive officer.

Accepted Answer

A) chair the board of directors 
B) run the day-to-day operations of the corporation 
C) audit the financial records of the corporation 
D) hire additional members for the board of directors 
A) chair the board of directors 
B) run the day-to-day operations of the corporation 
C) audit the financial records of the corporation 
D) hire additional members for the board of directors

Question 20

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,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%

A bond is a financial security that represents a promise to repay

When the coupon rate on newly issued bonds relative to older,outstanding bonds,the market price of the older bond .

What is the present value of $960 in one year if the current rate of interest is 6 percent?

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

Unlimited personal liability is a disadvantage for

Mortgage-backed securities are similar to bonds in that the investor who buys one receives

Tommy's Teddy Bears incurs $300,000 per year in explicit costs and $50,000 in implicit costs.The shop earns $600,000 in revenues and has $1.1 million in net worth.Based on this information,what is economic profit for Tommy's Teddy Bears?

Describe the three main categories of firms.

Gross revenue minus explicit costs equals

From the highest to the lowest,the percentage of profits earned by businesses in the United States is represented by which of the following?

Yolanda wants to expand her microbrewery business by buying out a competitor and is going to sell newly-issued corporate bonds to do so.This is an example of using ________ for her expansion plans.

Dividends are

A firm's managers need information on the firm's revenue and costs as well as information on the value of a firm's assets and the amount of the firm's debts to answer three basic questions.Which of the following is not one of those three basic questions?

Profits that are reinvested in a firm rather than paid to the firm's owners are called

The Aristocrat Corporation has taken out a loan to buy manufacturing equipment.The loan represents ________ for the company.

The shareholders of a corporation

Snap became the first firm in the history of U.S.financial markets to have an IPO that consisted entirely of non-voting shares.

What does unlimited liability mean?

The person hired by a corporation's board of directors to ________ is known as the chief executive officer.

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,what is the coupon rate?

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

A bond is a financial security that represents a promise to repay

When the coupon rate on newly issued bonds ________ relative to older,outstanding bonds,the market price of the older bond ________.

What is the present value of $960 in one year if the current rate of interest is 6 percent?

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

Unlimited personal liability is a disadvantage for

Mortgage-backed securities are similar to bonds in that the investor who buys one receives

Tommy's Teddy Bears incurs $300,000 per year in explicit costs and $50,000 in implicit costs.The shop earns $600,000 in revenues and has $1.1 million in net worth.Based on this information,what is economic profit for Tommy's Teddy Bears?

Describe the three main categories of firms.

Gross revenue minus explicit costs equals

From the highest to the lowest,the percentage of profits earned by businesses in the United States is represented by which of the following?

Yolanda wants to expand her microbrewery business by buying out a competitor and is going to sell newly-issued corporate bonds to do so.This is an example of using ________ for her expansion plans.

Dividends are

A firm's managers need information on the firm's revenue and costs as well as information on the value of a firm's assets and the amount of the firm's debts to answer three basic questions.Which of the following is not one of those three basic questions?

Profits that are reinvested in a firm rather than paid to the firm's owners are called

The Aristocrat Corporation has taken out a loan to buy manufacturing equipment.The loan represents ________ for the company.

The shareholders of a corporation

Snap became the first firm in the history of U.S.financial markets to have an IPO that consisted entirely of non-voting shares.

What does unlimited liability mean?

The person hired by a corporation's board of directors to ________ is known as the chief executive officer.

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,what is the coupon rate?

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 the coupon rate on newly issued bonds relative to older,outstanding bonds,the market price of the older bond .