Question 1

A corporation's management

Accepted Answer

A) owns the corporation. 
B) hires the board of directors. 
C) are liable for the corporation's debts. 
D) operates and controls a corporation in its day-to-day activities. 
A) owns the corporation. 
B) hires the board of directors. 
C) are liable for the corporation's debts. 
D) operates and controls a corporation in its day-to-day activities.

Question 2

What type of business is the easiest to set up?

Accepted Answer

A) sole proprietorship 
B) partnership 
C) corporation 
D) There is no difference in the ease of establishment. 
A) sole proprietorship 
B) partnership 
C) corporation 
D) There is no difference in the ease of establishment.

Question 3

An implicit cost is

Accepted Answer

A) a nonmonetary opportunity cost. 
B) a cost unique to sole proprietorships. 
C) a cost that involves spending money. 
D) a cost unique to corporations. 
A) a nonmonetary opportunity cost. 
B) a cost unique to sole proprietorships. 
C) a cost that involves spending money. 
D) a cost unique to corporations.

Question 4

Who controls a sole proprietorship?

Accepted Answer

A) owner 
B) stockholders 
C) bondholders 
D) employees 
A) owner 
B) stockholders 
C) bondholders 
D) employees

Question 5

A proprietorship or partnership can raise funds for expansion in all of the following ways except

Accepted Answer

A) borrowing from someone or an institution willing to lend the funds. 
B) reinvesting profit back into the business. 
C) taking on a partner or more partners. 
D) issuing stock through financial markets. 
A) borrowing from someone or an institution willing to lend the funds. 
B) reinvesting profit back into the business. 
C) taking on a partner or more partners. 
D) issuing stock through financial markets.

Question 6

In the United States,corporate profits are taxed

Accepted Answer

A) only at the corporate level. 
B) only when investors receive dividends. 
C) at both the corporate level and when investors receive dividends. 
D) neither at the corporate level nor when investors receive dividends. 
A) only at the corporate level. 
B) only when investors receive dividends. 
C) at both the corporate level and when investors receive dividends. 
D) neither at the corporate level nor when investors receive dividends.

Question 7

All of the following are examples of explicit cost a firm might incur except

Accepted Answer

A) the out-of-pocket expense to hire employees. 
B) taxes owed to the state government. 
C) the rental value of the warehouse space the company owns and uses for itself. 
D) the revenue a firm generates in using its resources. 
A) the out-of-pocket expense to hire employees. 
B) taxes owed to the state government. 
C) the rental value of the warehouse space the company owns and uses for itself. 
D) the revenue a firm generates in using its resources.

Question 8

When you buy previously-issued shares of Google stock,this transaction takes place in the

Accepted Answer

A) primary market. 
B) bond market. 
C) secondary market. 
D) bear market. 
A) primary market. 
B) bond market. 
C) secondary market. 
D) bear market.

Question 9

How do the owners of a partnership relate to the business?

Accepted Answer

A) The owners and the business are not separate legal entities. 
B) The owners and the business are separate legal entities. 
C) The assets of the owners are considered separate from the asset of the business. 
D) None of these describe the legal relationship of the owners to the business. 
A) The owners and the business are not separate legal entities. 
B) The owners and the business are separate legal entities. 
C) The assets of the owners are considered separate from the asset of the business. 
D) None of these describe the legal relationship of the owners to the business.

Question 10

How does the owner of a corporation relate to the business?

Accepted Answer

A) The owners of the business have a separate legal distinction from the business. 
B) The owners of the business have no separate legal distinction from the business. 
C) The personal assets are part of the corporation's assets. 
D) None of these describe the legal relationship of corporate owners to the business. 
A) The owners of the business have a separate legal distinction from the business. 
B) The owners of the business have no separate legal distinction from the business. 
C) The personal assets are part of the corporation's assets. 
D) None of these describe the legal relationship of corporate owners to the business.

Question 11

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a corporation.What is one advantage to Jeremy of setting up his business as a corporation?

Accepted Answer

A) By setting up the business as a corporation,Jeremy would not face double taxation. 
B) By setting up the business as a corporation,Jeremy would have the ability to share risk with shareholders. 
C) By setting up the business as a corporation,Jeremy would have both ownership and control over the business. 
D) All of the above would be advantages of setting up his business as a corporation. 
A) By setting up the business as a corporation,Jeremy would not face double taxation. 
B) By setting up the business as a corporation,Jeremy would have the ability to share risk with shareholders. 
C) By setting up the business as a corporation,Jeremy would have both ownership and control over the business. 
D) All of the above would be advantages of setting up his business as a corporation.

Question 12

If you want to know the present value of a future payment received in one year,what formula can you use?

Accepted Answer

A) Present value equals future payment times the current market rate of interest. 
B) Present value equals future payment divided by one plus the rate of interest. 
C) Present value equals one plus the rate of interest in decimals divided by future payment. 
D) Present value equals future payments times one plus the rate of interest. 
A) Present value equals future payment times the current market rate of interest. 
B) Present value equals future payment divided by one plus the rate of interest. 
C) Present value equals one plus the rate of interest in decimals divided by future payment. 
D) Present value equals future payments times one plus the rate of interest.

Question 13

If you own a $1,000 face value bond with one year remaining to maturity and a 3 percent coupon rate and new bonds are paying 14 percent,what is the most you can get for your old bond?

Accepted Answer

A) $903.51 
B) $997.19 
C) $1,000 
D) $1,140 
A) $903.51 
B) $997.19 
C) $1,000 
D) $1,140

Question 14

How is a stock's price-earnings ratio found?

Accepted Answer

A) by dividing the dividend by the closing price of the stock 
B) by dividing the dividend by the firm's earnings per share 
C) by dividing current market price of the stock by the firm's earnings per share 
D) by subtracting the firm's earnings per share from the closing price of the stock 
A) by dividing the dividend by the closing price of the stock 
B) by dividing the dividend by the firm's earnings per share 
C) by dividing current market price of the stock by the firm's earnings per share 
D) by subtracting the firm's earnings per share from the closing price of the stock

Question 15

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were ________ than they actually were,resulting in reported accounting profits for WorldCom that were ________ than their actual level.

Accepted Answer

A) higher; higher 
B) lower; higher 
C) lower; lower 
D) higher; lower 
A) higher; higher 
B) lower; higher 
C) lower; lower 
D) higher; lower

Question 16

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

Accepted Answer

Sole proprietorships and partn

Question 17

What is the primary difference between a sole proprietorship and a partnership?

Accepted Answer

A) Proprietorships have unlimited liability while partnerships have limited liability. 
B) Partnerships can issue stocks and bonds while proprietorships cannot. 
C) Partnerships have more owners than do proprietorships. 
D) There is no real difference between the two types of firms. 
A) Proprietorships have unlimited liability while partnerships have limited liability. 
B) Partnerships can issue stocks and bonds while proprietorships cannot. 
C) Partnerships have more owners than do proprietorships. 
D) There is no real difference between the two types of firms.

Question 18

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

Accepted Answer

A) $10,000 
B) $22,000 
C) $32,000 
D) $42,000 
A) $10,000 
B) $22,000 
C) $32,000 
D) $42,000

Question 19

How does a firm raise external funds through direct finance?

Accepted Answer

With direct finance,funds flow

Question 20

If the personal assets of the owners cannot be claimed if the business is bankrupt,the owners are said to have

Accepted Answer

A) unlimited liability. 
B) a proprietorship type of business. 
C) limited liability. 
D) a partnership type of business. 
A) unlimited liability. 
B) a proprietorship type of business. 
C) limited liability. 
D) a partnership type of business.

A corporation's management

What type of business is the easiest to set up?

An implicit cost is

Who controls a sole proprietorship?

A proprietorship or partnership can raise funds for expansion in all of the following ways except

In the United States,corporate profits are taxed

All of the following are examples of explicit cost a firm might incur except

When you buy previously-issued shares of Google stock,this transaction takes place in the

How do the owners of a partnership relate to the business?

How does the owner of a corporation relate to the business?

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a corporation.What is one advantage to Jeremy of setting up his business as a corporation?

If you want to know the present value of a future payment received in one year,what formula can you use?

If you own a $1,000 face value bond with one year remaining to maturity and a 3 percent coupon rate and new bonds are paying 14 percent,what is the most you can get for your old bond?

How is a stock's price-earnings ratio found?

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were than they actually were,resulting in reported accounting profits for WorldCom that were than their actual level.

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

What is the primary difference between a sole proprietorship and a partnership?

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

How does a firm raise external funds through direct finance?

If the personal assets of the owners cannot be claimed if the business is bankrupt,the owners are said to have

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

A corporation's management

What type of business is the easiest to set up?

An implicit cost is

Who controls a sole proprietorship?

A proprietorship or partnership can raise funds for expansion in all of the following ways except

In the United States,corporate profits are taxed

All of the following are examples of explicit cost a firm might incur except

When you buy previously-issued shares of Google stock,this transaction takes place in the

How do the owners of a partnership relate to the business?

How does the owner of a corporation relate to the business?

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a corporation.What is one advantage to Jeremy of setting up his business as a corporation?

If you want to know the present value of a future payment received in one year,what formula can you use?

If you own a $1,000 face value bond with one year remaining to maturity and a 3 percent coupon rate and new bonds are paying 14 percent,what is the most you can get for your old bond?

How is a stock's price-earnings ratio found?

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were ________ than they actually were,resulting in reported accounting profits for WorldCom that were ________ than their actual level.

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

What is the primary difference between a sole proprietorship and a partnership?

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

How does a firm raise external funds through direct finance?

If the personal assets of the owners cannot be claimed if the business is bankrupt,the owners are said to have

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

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were than they actually were,resulting in reported accounting profits for WorldCom that were than their actual level.