Question 1

The coupon rate of a bond is equal to

Accepted Answer

A) the coupon payment. 
B) the interest payment. 
C) the interest rate. 
D) the face value. 
A) the coupon payment. 
B) the interest payment. 
C) the interest rate. 
D) the face value.

Question 2

In 2011,the dividend yield on Microsoft (MSFT)stock rose from 1.97% to 3.10%.Which of the following would have generated that result?

Accepted Answer

A) The closing price of Microsoft stock rose. 
B) Microsoft announced an increase in the dividend it would pay per share. 
C) The price-earnings ratio rose. 
D) Microsoft issued bonds with a coupon rate equal to 3.10%. 
A) The closing price of Microsoft stock rose. 
B) Microsoft announced an increase in the dividend it would pay per share. 
C) The price-earnings ratio rose. 
D) Microsoft issued bonds with a coupon rate equal to 3.10%.

Question 3

A corporation is

Accepted Answer

A) the easiest type of business to set up. 
B) the least expensive type of business to set up. 
C) the most difficult type of business to set up. 
D) the least profitable type of business to set up. 
A) the easiest type of business to set up. 
B) the least expensive type of business to set up. 
C) the most difficult type of business to set up. 
D) the least profitable type of business to set up.

Question 4

Firms disclose financial statements in ________ and in ________.

Accepted Answer

A) periodic filings to the federal government; annual reports to shareholders 
B) daily filings to the federal government; daily reports to shareholders 
C) monthly reports to shareholders; 5-year balance statements to the board of directors 
D) weekly filings with the SEC; monthly reports to the Fed 
A) periodic filings to the federal government; annual reports to shareholders 
B) daily filings to the federal government; daily reports to shareholders 
C) monthly reports to shareholders; 5-year balance statements to the board of directors 
D) weekly filings with the SEC; monthly reports to the Fed

Question 5

Steve Ballmer is the Chief Executive Officer of Microsoft as well as a member of Microsoft's board of directors.Ballmer is therefore classified as an

Accepted Answer

A) inside director. 
B) outside director. 
C) independent director. 
D) unbiased director. 
A) inside director. 
B) outside director. 
C) independent director. 
D) unbiased director.

Question 6

In August 2011,Abercrombie & Fitch (ANF)posted a price-earnings ratio of 37.If the price of the stock at that time was $65 per share,which of the following must have been true?

Accepted Answer

A) ANF's revenues that month were $2.405 million. 
B) ANF's earnings per share was $1.76. 
C) ANF's coupon payment was $17.57 per year. 
D) ANF's dividend yield for the year was 65%. 
A) ANF's revenues that month were $2.405 million. 
B) ANF's earnings per share was $1.76. 
C) ANF's coupon payment was $17.57 per year. 
D) ANF's dividend yield for the year was 65%.

Question 7

How can a sole proprietorship raise funds needed for firm expansion?

Accepted Answer

By retaining earning

Question 8

Compared to buying stock in a privately-held firm,investing in a public firm

Accepted Answer

A) is often considered safer because private firms are subject to stricter SEC regulations. 
B) is often considered riskier because public firms are subject to stricter SEC regulations. 
C) is often considered riskier because private firms are subject to stricter SEC regulations. 
D) is often considered safer because public firms are subject to stricter SEC regulations. 
A) is often considered safer because private firms are subject to stricter SEC regulations. 
B) is often considered riskier because public firms are subject to stricter SEC regulations. 
C) is often considered riskier because private firms are subject to stricter SEC regulations. 
D) is often considered safer because public firms are subject to stricter SEC regulations.

Question 9

Which of the following would explain why economic profit might be less than accounting profit?

Accepted Answer

A) A firm's net income is less than its accounting profit. 
B) A firm has only explicit costs. 
C) A firm's net income is greater than its accounting profit. 
D) A firm has implicit costs as well as explicit costs. 
A) A firm's net income is less than its accounting profit. 
B) A firm has only explicit costs. 
C) A firm's net income is greater than its accounting profit. 
D) A firm has implicit costs as well as explicit costs.

Question 10

One result of the financial meltdown of the late 2000s was that mortgage institutions ________ and ________ were brought under direct control of the government.

Accepted Answer

A) Fannie Mae; Freddie Mac 
B) Glass Steagall; Sarbanes Oxley 
C) Goldman Sachs; Morgan Stanley 
D) Lehman Brothers; FDIC 
A) Fannie Mae; Freddie Mac 
B) Glass Steagall; Sarbanes Oxley 
C) Goldman Sachs; Morgan Stanley 
D) Lehman Brothers; FDIC

Question 11

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time diminishes that member's independence from the company's CEO.If this is true,it would tend to

Accepted Answer

A) reduce the principal-agent problem. 
B) increase the principal-agent problem. 
C) be in the best interest of shareholders. 
D) have no impact on the company's performance,since the CEO is only one member of top management. 
A) reduce the principal-agent problem. 
B) increase the principal-agent problem. 
C) be in the best interest of shareholders. 
D) have no impact on the company's performance,since the CEO is only one member of top management.

Question 12

The minimum amount that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested,is referred to as

Accepted Answer

A) the explicit costs of production. 
B) net worth. 
C) net income. 
D) a normal rate of return. 
A) the explicit costs of production. 
B) net worth. 
C) net income. 
D) a normal rate of return.

Question 13

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

Accepted Answer

A) least; least 
B) least; most 
C) most; least 
D) most; most 
A) least; least 
B) least; most 
C) most; least 
D) most; most

Question 14

How can a corporation's board of directors and its managers try to reduce the principal-agent problem?

Accepted Answer

A corporation's board of directors can t

Question 15

The Sarbanes-Oxley Act of 2002 requires that each member of the board of directors personally certify the accuracy of financial reports.

Accepted Answer

A) True 
 B)False

Question 16

What is corporate governance?

Accepted Answer

Corporate governance refers to

Question 17

A firm's accounting profit is also its

Accepted Answer

A) economic profit. 
B) income statement. 
C) net income. 
D) statement of liabilities. 
A) economic profit. 
B) income statement. 
C) net income. 
D) statement of liabilities.

Question 18

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

Accepted Answer

A) double taxation 
B) ease in setting up 
C) low expenses of legally organizing 
D) greater ability to raise funds 
A) double taxation 
B) ease in setting up 
C) low expenses of legally organizing 
D) greater ability to raise funds

Question 19

If a stock's dividend is expected to grow at a constant rate of eight percent in the future and it has just paid a dividend of $1.25 a share,and you have an alternative investment of equal risk that will earn a 12 percent rate of return,what would you be willing to pay per share for this stock?

Accepted Answer

A) $31.25 
B) $1.40 
C) $1.25 
D) $1.12 
A) $31.25 
B) $1.40 
C) $1.25 
D) $1.12

Question 20

What is the present value of $888 in a one year if the current rate of interest is five percent?

Accepted Answer

A) $4,440 
B) $845.71 
C) $177.60 
D) none of these 
A) $4,440 
B) $845.71 
C) $177.60 
D) none of these

The coupon rate of a bond is equal to

In 2011,the dividend yield on Microsoft (MSFT)stock rose from 1.97% to 3.10%.Which of the following would have generated that result?

A corporation is

Firms disclose financial statements in and in .

Steve Ballmer is the Chief Executive Officer of Microsoft as well as a member of Microsoft's board of directors.Ballmer is therefore classified as an

In August 2011,Abercrombie & Fitch (ANF)posted a price-earnings ratio of 37.If the price of the stock at that time was $65 per share,which of the following must have been true?

How can a sole proprietorship raise funds needed for firm expansion?

Compared to buying stock in a privately-held firm,investing in a public firm

Which of the following would explain why economic profit might be less than accounting profit?

One result of the financial meltdown of the late 2000s was that mortgage institutions and were brought under direct control of the government.

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time diminishes that member's independence from the company's CEO.If this is true,it would tend to

The minimum amount that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested,is referred to as

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

How can a corporation's board of directors and its managers try to reduce the principal-agent problem?

The Sarbanes-Oxley Act of 2002 requires that each member of the board of directors personally certify the accuracy of financial reports.

What is corporate governance?

A firm's accounting profit is also its

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

If a stock's dividend is expected to grow at a constant rate of eight percent in the future and it has just paid a dividend of $1.25 a share,and you have an alternative investment of equal risk that will earn a 12 percent rate of return,what would you be willing to pay per share for this stock?

What is the present value of $888 in a one year if the current rate of interest is five percent?

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

The coupon rate of a bond is equal to

In 2011,the dividend yield on Microsoft (MSFT)stock rose from 1.97% to 3.10%.Which of the following would have generated that result?

A corporation is

Firms disclose financial statements in ________ and in ________.

Steve Ballmer is the Chief Executive Officer of Microsoft as well as a member of Microsoft's board of directors.Ballmer is therefore classified as an

In August 2011,Abercrombie & Fitch (ANF)posted a price-earnings ratio of 37.If the price of the stock at that time was $65 per share,which of the following must have been true?

How can a sole proprietorship raise funds needed for firm expansion?

Compared to buying stock in a privately-held firm,investing in a public firm

Which of the following would explain why economic profit might be less than accounting profit?

One result of the financial meltdown of the late 2000s was that mortgage institutions ________ and ________ were brought under direct control of the government.

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time diminishes that member's independence from the company's CEO.If this is true,it would tend to

The minimum amount that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested,is referred to as

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

How can a corporation's board of directors and its managers try to reduce the principal-agent problem?

The Sarbanes-Oxley Act of 2002 requires that each member of the board of directors personally certify the accuracy of financial reports.

What is corporate governance?

A firm's accounting profit is also its

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

If a stock's dividend is expected to grow at a constant rate of eight percent in the future and it has just paid a dividend of $1.25 a share,and you have an alternative investment of equal risk that will earn a 12 percent rate of return,what would you be willing to pay per share for this stock?

What is the present value of $888 in a one year if the current rate of interest is five percent?

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

Firms disclose financial statements in and in .

One result of the financial meltdown of the late 2000s was that mortgage institutions and were brought under direct control of the government.

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