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

Included on the board of directors of Microsoft are Reed hastings,the founder of Netflix,the president of Harvey Mudd college Maria M.Klawe,and the vice chairman of Bank of America Charles H.Noski.These three board members do not have a direct management role with Microsoft and are therefore referred to as

The value you give today to money you will receive in the future is called the future payment's

What is the central role of financial intermediaries in a market economy?

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50,what is the coupon rate?

What role do well functioning financial markets play in a market economy?

Anything of value owned by a person or a firm is

Securities dealers that trade stocks and bonds outside exchanges comprise the

If you purchase a share of stock from your friend who initially purchased the stock three years ago,your purchase of the stock represents a transaction in the primary financial market

When an investor buys a corporate bond,the ________ the bond is a loan to the corporation.

Abercrombie & Fitch wants to raise $8 million to finance the construction of a new store,and the company wishes to raise the funds through direct finance.Which of the following methods could it use?

If you own a bond with a 3 percent coupon rate and new bonds are paying 8 percent,what will happen to your bond's market price?

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

Normally,the principal-agent problem

You have a bond that pays $60 per year in coupon payments.Which of the following would result in a decrease in the price of your bond?

If Abercrombie & Fitch borrows $8 million from a bank to finance the construction of a new store,this is an example of

When the coupon rate on newly issued bonds increases relative to older,outstanding bonds,what happens?

Generally with bond ratings,the lower the rating,the ________ the interest rate an investor will receive and the ________ the the risk that the issuer of the bond will default.

In the United States,partnership profits are taxed at the business level and then are taxed again as personal income in the form of dividend payments.

Donnie's Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit costs.The bakery earns $800,000 in revenues and has $2 million in net worth.Based on this information,what is the economic profit for Donnie's Donuts?

The three most widely followed stock indexes in the United States include all of the following except