Question 1

Which of the following is an advantage of starting a new business as a sole proprietorship?

Accepted Answer

A) double taxation 
B) ease in setting up 
C) limited liability 
D) greater ability to raise funds 
A) double taxation 
B) ease in setting up 
C) limited liability 
D) greater ability to raise funds

Question 2

The legislation passed in 2010 that was intended to reform regulation of the financial system was the

Accepted Answer

A) Wall Street Reform and Consumer Protection Act. 
B) Sarbanes-Oxley Act. 
C) Glass-Steagall Act. 
D) Federal National Mortgage Act. 
A) Wall Street Reform and Consumer Protection Act. 
B) Sarbanes-Oxley Act. 
C) Glass-Steagall Act. 
D) Federal National Mortgage Act.

Question 3

Of the different types of businesses,a ________ has the most government rules and the most government regulations affecting it.

Accepted Answer

A) corporation 
B) partnership 
C) sole proprietorship 
D) All of the above are subject to the same amount of rules and regulations. 
A) corporation 
B) partnership 
C) sole proprietorship 
D) All of the above are subject to the same amount of rules and regulations.

Question 4

Kendrick wants to start a tax preparation company and is going to his bank to borrow $50,000.This is an example of

Accepted Answer

A) direct finance. 
B) indirect finance. 
C) a primary market transaction. 
D) a secondary market transaction. 
A) direct finance. 
B) indirect finance. 
C) a primary market transaction. 
D) a secondary market transaction.

Question 5

If a company pays a dividend of $5 to be received one year from now,dividends are expected to grow at a rate of 8 percent per year for the indefinite future,and the interest rate is 14 percent,the price of the company's stock should be ________ per share.

Accepted Answer

A) $8.00 
B) $83.33 
C) $227.27 
D) $610.00 
A) $8.00 
B) $83.33 
C) $227.27 
D) $610.00

Question 6

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

Question 7

What does it mean to say there is a separation of ownership from control in large corporations?

Accepted Answer

Shares of stock represent partial owners

Question 8

Of the types of business organizations in the United States,sole proprietorships account for the ________ percentage of firms and the ________ percentage of profits.

Accepted Answer

A) smallest; smallest 
B) smallest; largest 
C) largest; smallest 
D) largest; largest 
A) smallest; smallest 
B) smallest; largest 
C) largest; smallest 
D) largest; largest

Question 9

Corporate governance refers to the way in which a corporation is structured and the effect that structure has on the corporation's behavior.

Accepted Answer

A) True 
 B)False

Question 10

Before its IPO,Snap,the parent firm of Snapchat,was an example of a private firm.As a private firm,Snap was

Accepted Answer

A) not subject to government regulations and taxation. 
B) run by stockholders and a board of directors. 
C) run by its founders,Evan Spiegel and Bobby Murphy. 
D) not legally allowed to raise funds through venture capital firms. 
A) not subject to government regulations and taxation. 
B) run by stockholders and a board of directors. 
C) run by its founders,Evan Spiegel and Bobby Murphy. 
D) not legally allowed to raise funds through venture capital firms.

Question 11

A sole proprietorship is the type of business that has ________ government rules and regulations affecting it.

Accepted Answer

A) no 
B) the fewest 
C) the most 
D) only federal 
A) no 
B) the fewest 
C) the most 
D) only federal

Question 12

Traditionally,Wall Street investment banks had been organized as ________,but by 2000 they had converted to being ________.

Accepted Answer

A) partnerships; publicly-traded companies 
B) sole proprietorships; partnerships 
C) corporations; partnerships 
D) partnerships; sole proprietorships 
A) partnerships; publicly-traded companies 
B) sole proprietorships; partnerships 
C) corporations; partnerships 
D) partnerships; sole proprietorships

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

Which of the following statements is true?

Accepted Answer

A) A stock can possibly pay dividends forever,but bonds have a fixed number of payments. 
B) Differences of opinion about a bond's future may vary considerably but there is less difference about a stock's future. 
C) The future growth of a stock is more certain than the payments of a bond. 
D) Bonds represent partial ownership in a firm but stocks do not. 
A) A stock can possibly pay dividends forever,but bonds have a fixed number of payments. 
B) Differences of opinion about a bond's future may vary considerably but there is less difference about a stock's future. 
C) The future growth of a stock is more certain than the payments of a bond. 
D) Bonds represent partial ownership in a firm but stocks do not.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40,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%

Question 17

Stocks represent partial ownership of a firm.

Accepted Answer

A) True 
 B)False

Question 18

On a balance sheet,a company's accounts receivable are listed as

Accepted Answer

A) current assets. 
B) current liabilities. 
C) stockholder's equity. 
D) goodwill. 
A) current assets. 
B) current liabilities. 
C) stockholder's equity. 
D) goodwill.

Question 19

A nonmonetary opportunity cost is

Accepted Answer

A) an implicit cost. 
B) an explicit cost. 
C) a direct cost. 
D) an accounting cost. 
A) an implicit cost. 
B) an explicit cost. 
C) a direct cost. 
D) an accounting cost.

Question 20

One of the most widely followed stock indexes in the United States is the S&P 500.This index represents

Accepted Answer

A) the stock prices of 500 large U.S.firms. 
B) the stock prices of the 500 most valuable firms worldwide. 
C) the stock prices of more than 4,000 U.S.firms. 
D) the stock prices of 30 large U.S.corporations. 
A) the stock prices of 500 large U.S.firms. 
B) the stock prices of the 500 most valuable firms worldwide. 
C) the stock prices of more than 4,000 U.S.firms. 
D) the stock prices of 30 large U.S.corporations.

Which of the following is an advantage of starting a new business as a sole proprietorship?

The legislation passed in 2010 that was intended to reform regulation of the financial system was the

Of the different types of businesses,a ________ has the most government rules and the most government regulations affecting it.

Kendrick wants to start a tax preparation company and is going to his bank to borrow $50,000.This is an example of

If a company pays a dividend of $5 to be received one year from now,dividends are expected to grow at a rate of 8 percent per year for the indefinite future,and the interest rate is 14 percent,the price of the company's stock should be ________ per share.

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?

What does it mean to say there is a separation of ownership from control in large corporations?

Of the types of business organizations in the United States,sole proprietorships account for the percentage of firms and the percentage of profits.

Corporate governance refers to the way in which a corporation is structured and the effect that structure has on the corporation's behavior.

Before its IPO,Snap,the parent firm of Snapchat,was an example of a private firm.As a private firm,Snap was

A sole proprietorship is the type of business that has ________ government rules and regulations affecting it.

Traditionally,Wall Street investment banks had been organized as ,but by 2000 they had converted to being .

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.

Which of the following statements is true?

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

If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40,what is the coupon rate?

Stocks represent partial ownership of a firm.

On a balance sheet,a company's accounts receivable are listed as

A nonmonetary opportunity cost is

One of the most widely followed stock indexes in the United States is the S&P 500.This index represents

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

Which of the following is an advantage of starting a new business as a sole proprietorship?

The legislation passed in 2010 that was intended to reform regulation of the financial system was the

Of the different types of businesses,a ________ has the most government rules and the most government regulations affecting it.

Kendrick wants to start a tax preparation company and is going to his bank to borrow $50,000.This is an example of

If a company pays a dividend of $5 to be received one year from now,dividends are expected to grow at a rate of 8 percent per year for the indefinite future,and the interest rate is 14 percent,the price of the company's stock should be ________ per share.

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?

What does it mean to say there is a separation of ownership from control in large corporations?

Of the types of business organizations in the United States,sole proprietorships account for the ________ percentage of firms and the ________ percentage of profits.

Corporate governance refers to the way in which a corporation is structured and the effect that structure has on the corporation's behavior.

Before its IPO,Snap,the parent firm of Snapchat,was an example of a private firm.As a private firm,Snap was

A sole proprietorship is the type of business that has ________ government rules and regulations affecting it.

Traditionally,Wall Street investment banks had been organized as ________,but by 2000 they had converted to being ________.

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.

Which of the following statements is true?

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

If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40,what is the coupon rate?

Stocks represent partial ownership of a firm.

On a balance sheet,a company's accounts receivable are listed as

A nonmonetary opportunity cost is

One of the most widely followed stock indexes in the United States is the S&P 500.This index represents

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

Of the types of business organizations in the United States,sole proprietorships account for the percentage of firms and the percentage of profits.

Traditionally,Wall Street investment banks had been organized as ,but by 2000 they had converted to being .

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.