Question 1

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.

Question 2

Securities dealers that trade stocks and bonds ________ comprise the over-the-counter market.

Accepted Answer

A) directly instead of electronically 
B) outside exchanges 
C) that have previously been sold 
D) valued at less than $1 each 
A) directly instead of electronically 
B) outside exchanges 
C) that have previously been sold 
D) valued at less than $1 each

Question 3

Indirect finance refers to the flow of funds from savers to borrowers through financial intermediaries.

Accepted Answer

A) True 
 B)False

Question 4

If a dollar today will likely have more purchasing power because of inflation,then a dollar a year from now ________ a dollar today.

Accepted Answer

A) will be more valuable than 
B) will be less valuable than 
C) will have the same value as 
D) may be more valuable or less valuable than 
A) will be more valuable than 
B) will be less valuable than 
C) will have the same value as 
D) may be more valuable or less valuable than

Question 5

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 economic profit?

Accepted Answer

A) $14,000 
B) $21,000 
C) $31,000 
D) $38,000 
A) $14,000 
B) $21,000 
C) $31,000 
D) $38,000

Question 6

All of the following are characteristics of stock except

Accepted Answer

A) stock does not represent a promise to repay a fixed amount of funds. 
B) dividends paid to owners of stock represent a firm's profits. 
C) stock promises to repay a fixed amount to of funds to stock owners. 
D) stock represents ownership in a firm. 
A) stock does not represent a promise to repay a fixed amount of funds. 
B) dividends paid to owners of stock represent a firm's profits. 
C) stock promises to repay a fixed amount to of funds to stock owners. 
D) stock represents ownership in a firm.

Question 7

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 are the implicit costs of her business?

Accepted Answer

A) $12,000 
B) $30,000 
C) $72,000 
D) $86,000 
A) $12,000 
B) $30,000 
C) $72,000 
D) $86,000

Question 8

Sylvia wants to expand her taxidermy business and is going to use profits from the business to do so.This is an example of using ________ for her expansion.

Accepted Answer

A) direct finance 
B) indirect finance 
C) retained earnings 
D) dividends 
A) direct finance 
B) indirect finance 
C) retained earnings 
D) dividends

Question 9

From the highest to the lowest,the percentage of firms by business type in the United States is represented by which of the following?

Accepted Answer

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

Question 10

Most app developers have adopted the business model of

Accepted Answer

A) charging a small fee for their apps to be downloaded. 
B) allowing their apps to be downloaded and used for free,while trying to still earn money from users. 
C) charging a between $1.99 and $2.99 for their apps to be downloaded. 
D) allowing their apps to be downloaded to one device for free,but charging a high price for the apps to be downloaded to additional devices. 
A) charging a small fee for their apps to be downloaded. 
B) allowing their apps to be downloaded and used for free,while trying to still earn money from users. 
C) charging a between $1.99 and $2.99 for their apps to be downloaded. 
D) allowing their apps to be downloaded to one device for free,but charging a high price for the apps to be downloaded to additional devices.

Question 11

Giorgio wants to build a new distribution warehouse for his sporting goods business and is going to issue new shares of stock to do so.This is an example of using ________ for his building project.

Accepted Answer

A) direct finance 
B) indirect finance 
C) retained earnings 
D) dividends 
A) direct finance 
B) indirect finance 
C) retained earnings 
D) dividends

Question 12

When Carvana sold stock to the public in its IPO,it did so through the New York Stock Exchange.People who bought the shares

Accepted Answer

A) were promised to be repaid their investment plus interest. 
B) did so in the indirect finance market. 
C) own part of the company. 
D) All of the above are true. 
A) were promised to be repaid their investment plus interest. 
B) did so in the indirect finance market. 
C) own part of the company. 
D) All of the above are true.

Question 13

Why do corporate boards of directors sometimes link top managers' compensation to the corporations' stock prices? How might tying compensation too closely to stock prices create an incentive for corporate fraud.

Accepted Answer

Corporate boards of directors sometimes

Question 14

All of the following are characteristics of a bond except

Accepted Answer

A) a bond represents a promise to repay a fixed amount of funds. 
B) the face value is repaid when the bond matures. 
C) the coupon payment is the interest payment on the bond. 
D) bonds generally pay dividends each year. 
A) a bond represents a promise to repay a fixed amount of funds. 
B) the face value is repaid when the bond matures. 
C) the coupon payment is the interest payment on the bond. 
D) bonds generally pay dividends each year.

Question 15

An asset is anything of value owned by a person or firm.

Accepted Answer

A) True 
 B)False

Question 16

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 accounting 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 17

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

Accepted Answer

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

Question 18

Juliana,Gabrielle,and Marcela want to start a business they are the only owners and the company does not issue stock.The type of business they want 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 19

When a business is set up as a partnership,the owners of the business face limited liability.

Accepted Answer

A) True 
 B)False

Question 20

Why might a small investor be interested in buying a mutual fund as opposed to stock in an individual company?

Accepted Answer

By buying shares in a mutual fund,small

Alt-A mortgages are

Securities dealers that trade stocks and bonds ________ comprise the over-the-counter market.

Indirect finance refers to the flow of funds from savers to borrowers through financial intermediaries.

If a dollar today will likely have more purchasing power because of inflation,then a dollar a year from now ________ a dollar today.

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 economic profit?

All of the following are characteristics of stock except

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 are the implicit costs of her business?

Sylvia wants to expand her taxidermy business and is going to use profits from the business to do so.This is an example of using ________ for her expansion.

From the highest to the lowest,the percentage of firms by business type in the United States is represented by which of the following?

Most app developers have adopted the business model of

Giorgio wants to build a new distribution warehouse for his sporting goods business and is going to issue new shares of stock to do so.This is an example of using ________ for his building project.

When Carvana sold stock to the public in its IPO,it did so through the New York Stock Exchange.People who bought the shares

Why do corporate boards of directors sometimes link top managers' compensation to the corporations' stock prices? How might tying compensation too closely to stock prices create an incentive for corporate fraud.

All of the following are characteristics of a bond except

An asset is anything of value owned by a person or firm.

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 accounting profit for Tommy's Teddy Bears?

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

Juliana,Gabrielle,and Marcela want to start a business they are the only owners and the company does not issue stock.The type of business they want to start is a

When a business is set up as a partnership,the owners of the business face limited liability.

Why might a small investor be interested in buying a mutual fund as opposed to stock in an individual company?

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

Alt-A mortgages are

Securities dealers that trade stocks and bonds ________ comprise the over-the-counter market.

Indirect finance refers to the flow of funds from savers to borrowers through financial intermediaries.

If a dollar today will likely have more purchasing power because of inflation,then a dollar a year from now ________ a dollar today.

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 economic profit?

All of the following are characteristics of stock except

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 are the implicit costs of her business?

Sylvia wants to expand her taxidermy business and is going to use profits from the business to do so.This is an example of using ________ for her expansion.

From the highest to the lowest,the percentage of firms by business type in the United States is represented by which of the following?

Most app developers have adopted the business model of

Giorgio wants to build a new distribution warehouse for his sporting goods business and is going to issue new shares of stock to do so.This is an example of using ________ for his building project.

When Carvana sold stock to the public in its IPO,it did so through the New York Stock Exchange.People who bought the shares

Why do corporate boards of directors sometimes link top managers' compensation to the corporations' stock prices? How might tying compensation too closely to stock prices create an incentive for corporate fraud.

All of the following are characteristics of a bond except

An asset is anything of value owned by a person or firm.

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 accounting profit for Tommy's Teddy Bears?

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

Juliana,Gabrielle,and Marcela want to start a business they are the only owners and the company does not issue stock.The type of business they want to start is a

When a business is set up as a partnership,the owners of the business face limited liability.

Why might a small investor be interested in buying a mutual fund as opposed to stock in an individual company?

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,corporations account for percentage of firms and percentage of profits.