Question 1

What is the formula you should use to determine a bank account's future value in one year?

Accepted Answer

A) Future value equals the present value plus the rate of interest. 
B) Future value equals the present value minus the rate of interest. 
C) Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D) Future value equals the present value divided by one plus the rate of interest in decimals. 
A) Future value equals the present value plus the rate of interest. 
B) Future value equals the present value minus the rate of interest. 
C) Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D) Future value equals the present value divided by one plus the rate of interest in decimals. C

Question 2

Dividends are

Accepted Answer

A) financial securities which represent ownership in a corporation. 
B) the yearly payments associated with bonds. 
C) the interest rate paid on shares of stock. 
D) payments by a corporation to its shareholders. 
A) financial securities which represent ownership in a corporation. 
B) the yearly payments associated with bonds. 
C) the interest rate paid on shares of stock. 
D) payments by a corporation to its shareholders. D

Question 3

Economic profit is the difference between a firm's revenue and its opportunity costs.

Accepted Answer

A) True 
 B)False  True

Question 4

The financial statements of firms generally are audited by

Accepted Answer

A) employees of the firm being audited. 
B) employees of private accounting firms. 
C) employees of the federal government. 
D) the board of directors of the corporation being audited. 
A) employees of the firm being audited. 
B) employees of private accounting firms. 
C) employees of the federal government. 
D) the board of directors of the corporation being audited.

Question 5

What are earnings per share equal to?

Accepted Answer

A) the last dividend payment made 
B) total dividend payments plus retained earnings divided by outstanding stock shares 
C) the amount by which the stock's market price has increased in the last year 
D) revenues divided by the number of stockholders 
A) the last dividend payment made 
B) total dividend payments plus retained earnings divided by outstanding stock shares 
C) the amount by which the stock's market price has increased in the last year 
D) revenues divided by the number of stockholders

Question 6

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

Accepted Answer

A) You are liable for organizing the business. 
B) You could stand to lose your personal wealth if the business goes bankrupt. 
C) There is no legal responsibility of the business in case a customer sues,as the business is legally untouchable. 
D) None of these explain what unlimited liability means. 
A) You are liable for organizing the business. 
B) You could stand to lose your personal wealth if the business goes bankrupt. 
C) There is no legal responsibility of the business in case a customer sues,as the business is legally untouchable. 
D) None of these explain what unlimited liability means.

Question 7

Two of the firms involved in the accounting scandals of the early 2000s were

Accepted Answer

A) Arthur Anderson and NBC. 
B) Western Digital and General Motors. 
C) WorldCom and Enron. 
D) DuPont and Lehman Brothers. 
A) Arthur Anderson and NBC. 
B) Western Digital and General Motors. 
C) WorldCom and Enron. 
D) DuPont and Lehman Brothers.

Question 8

Define a sole proprietorship.

Accepted Answer

A firm own

Question 9

How much is a bond that pays $20 in coupon payments for 4 years and $1,000 at the end of the fourth year worth if the interest rate is 5%?

Accepted Answer

A) $822.70 
B) $893.62 
C) $1,070.92 
D) $1,080 
A) $822.70 
B) $893.62 
C) $1,070.92 
D) $1,080

Question 10

A firm's net worth is calculated as

Accepted Answer

A) the difference between a firm's revenues and explicit costs. 
B) the difference between a firm's revenues and implicit costs. 
C) the difference between a firm's assets and liabilities. 
D) the difference between a firm's liabilities and outstanding equities. 
A) the difference between a firm's revenues and explicit costs. 
B) the difference between a firm's revenues and implicit costs. 
C) the difference between a firm's assets and liabilities. 
D) the difference between a firm's liabilities and outstanding equities.

Question 11

A firm in a market economy must do all of the following to succeed except

Accepted Answer

A) produce the goods and services that consumers want at a lower cost than consumers themselves can produce. 
B) organize the factors of production into a functioning,efficient unit. 
C) have access to sufficient funds. 
D) be organized as a corporation. 
A) produce the goods and services that consumers want at a lower cost than consumers themselves can produce. 
B) organize the factors of production into a functioning,efficient unit. 
C) have access to sufficient funds. 
D) be organized as a corporation.

Question 12

A financial security that represents a promise to repay a fixed amount of funds is a

Accepted Answer

A) share of stock. 
B) coupon. 
C) dividend. 
D) bond. 
A) share of stock. 
B) coupon. 
C) dividend. 
D) bond.

Question 13

Which of the following is a characteristic of a bond?

Accepted Answer

A) A bond represents a promise to repay a fixed amount of funds. 
B) The face value or principal plus interest is repaid at a specified period of time. 
C) The length of coupon payments is fixed by the stated maturity period. 
D) All of these are characteristic of bonds. 
A) A bond represents a promise to repay a fixed amount of funds. 
B) The face value or principal plus interest is repaid at a specified period of time. 
C) The length of coupon payments is fixed by the stated maturity period. 
D) All of these are characteristic of bonds.

Question 14

On a balance sheet

Accepted Answer

A) total assets must equal total liabilities plus equity. 
B) total assets plus equity must equal total liabilities. 
C) total assets plus total liabilities must equal zero. 
D) total assets plus total liabilities plus equity must equal zero. 
A) total assets must equal total liabilities plus equity. 
B) total assets plus equity must equal total liabilities. 
C) total assets plus total liabilities must equal zero. 
D) total assets plus total liabilities plus equity must equal zero.

Question 15

A partnership is ________ type of business.

Accepted Answer

A) the most common. 
B) the least common 
C) the least risky 
D) the most profitable 
A) the most common. 
B) the least common 
C) the least risky 
D) the most profitable

Question 16

Stockholders

Accepted Answer

A) are liable for the debts of a corporation. 
B) are the owners of a corporation. 
C) control a corporation's day-to-day activities. 
D) hire the managers of a corporation. 
A) are liable for the debts of a corporation. 
B) are the owners of a corporation. 
C) control a corporation's day-to-day activities. 
D) hire the managers of a corporation.

Question 17

How does the principal-agent problem extend to managers and employees?

Accepted Answer

Just as corporate shareholders (owners)c

Question 18

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What are the implicit costs of his business?

Accepted Answer

A) $8,000 
B) $18,000 
C) $24,000 
D) $32,000 
A) $8,000 
B) $18,000 
C) $24,000 
D) $32,000

Question 19

________ is called an implicit cost,while ________ is called an explicit cost.

Accepted Answer

A) An accounting cost; an economic cost 
B) A nonmonetary opportunity cost; a cost that involves spending money 
C) A production cost; a sales cost 
D) An actual cost; a hypothetical cost 
A) An accounting cost; an economic cost 
B) A nonmonetary opportunity cost; a cost that involves spending money 
C) A production cost; a sales cost 
D) An actual cost; a hypothetical cost

Question 20

Who owns a corporation?

Accepted Answer

A) the board of directors 
B) the stockholders 
C) the employees 
D) the CEO 
A) the board of directors 
B) the stockholders 
C) the employees 
D) the CEO

What is the formula you should use to determine a bank account's future value in one year?

Dividends are

Economic profit is the difference between a firm's revenue and its opportunity costs.

The financial statements of firms generally are audited by

What are earnings per share equal to?

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

Two of the firms involved in the accounting scandals of the early 2000s were

Define a sole proprietorship.

How much is a bond that pays $20 in coupon payments for 4 years and $1,000 at the end of the fourth year worth if the interest rate is 5%?

A firm's net worth is calculated as

A firm in a market economy must do all of the following to succeed except

A financial security that represents a promise to repay a fixed amount of funds is a

Which of the following is a characteristic of a bond?

On a balance sheet

A partnership is ________ type of business.

Stockholders

How does the principal-agent problem extend to managers and employees?

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What are the implicit costs of his business?

is called an implicit cost,while is called an explicit cost.

Who owns a corporation?

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

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

Exam 8: Firms, the Stock Market, and Corporate Governance

What is the formula you should use to determine a bank account's future value in one year?

Dividends are

Economic profit is the difference between a firm's revenue and its opportunity costs.

The financial statements of firms generally are audited by

What are earnings per share equal to?

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

Two of the firms involved in the accounting scandals of the early 2000s were

Define a sole proprietorship.

How much is a bond that pays $20 in coupon payments for 4 years and $1,000 at the end of the fourth year worth if the interest rate is 5%?

A firm's net worth is calculated as

A firm in a market economy must do all of the following to succeed except

A financial security that represents a promise to repay a fixed amount of funds is a

Which of the following is a characteristic of a bond?

On a balance sheet

A partnership is ________ type of business.

Stockholders

How does the principal-agent problem extend to managers and employees?

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What are the implicit costs of his business?

________ is called an implicit cost,while ________ is called an explicit cost.

Who owns a corporation?

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

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

is called an implicit cost,while is called an explicit cost.