Question 1

A nonmonetary opportunity cost is called a(n)________,while a cost that involves spending money is called a(n)________.

Accepted Answer

A) accounting cost; explicit cost 
B) implicit cost; explicit cost 
C) accounting profit; economic profit 
D) normal rate of return; asset 
A) accounting cost; explicit cost 
B) implicit cost; explicit cost 
C) accounting profit; economic profit 
D) normal rate of return; asset

Question 2

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 3

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 4

The volatility of a stock's market price is indicated by

Accepted Answer

A) the highest stock price and the lowest stock price over the previous year. 
B) the price of newly issued shares compared to the price of previously issued shares. 
C) the difference between the stock's selling price and its asking price. 
D) the stock's price-earnings ratio. 
A) the highest stock price and the lowest stock price over the previous year. 
B) the price of newly issued shares compared to the price of previously issued shares. 
C) the difference between the stock's selling price and its asking price. 
D) the stock's price-earnings ratio.

Question 5

Which type of business has the least government rules and regulations affecting it?

Accepted Answer

A) sole proprietorship 
B) partnership 
C) corporation 
D) They all have the same set of rules and regulations affecting them. 
A) sole proprietorship 
B) partnership 
C) corporation 
D) They all have the same set of rules and regulations affecting them.

Question 6

Securities dealers that trade stocks and bonds outside exchanges comprise the

Accepted Answer

A) foreign exchange market. 
B) over-the-counter market. 
C) NASDAQ market. 
D) outlet market. 
A) foreign exchange market. 
B) over-the-counter market. 
C) NASDAQ market. 
D) outlet market.

Question 7

Which of the following is not an advantage of starting a new business as a proprietorship?

Accepted Answer

A) The owner has complete control over the business. 
B) A proprietorship has few government rules and regulations to comply with. 
C) Business profits are only taxed once,not twice. 
D) A proprietorship can easily attain additional funding. 
A) The owner has complete control over the business. 
B) A proprietorship has few government rules and regulations to comply with. 
C) Business profits are only taxed once,not twice. 
D) A proprietorship can easily attain additional funding.

Question 8

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 9

Which of the following does not take place in the direct finance market?

Accepted Answer

A) Ownership in corporations is sold in the form of common stock. 
B) Deposits from savers are accumulated and loans made to borrowers. 
C) Ownership in corporations is sold in the form of preferred stock. 
D) Corporate bonds are sold to savers. 
A) Ownership in corporations is sold in the form of common stock. 
B) Deposits from savers are accumulated and loans made to borrowers. 
C) Ownership in corporations is sold in the form of preferred stock. 
D) Corporate bonds are sold to savers.

Question 10

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

Accepted Answer

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

Question 11

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

Accepted Answer

A) time-sensitive value. 
B) future value. 
C) present value. 
D) historical value. 
A) time-sensitive value. 
B) future value. 
C) present value. 
D) historical value.

Question 12

Purchasing a firm's stock in an IPO can be risky because financial information may not be fully disclosed.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) Coupon payments on newly-issued bonds rise to $80 per year. 
B) The likelihood that the firm issuing your bond will default on debt increases. 
C) The price of a share of stock in the company falls. 
D) Coupon payments on newly-issued bonds fall to $50 per year. 
A) Coupon payments on newly-issued bonds rise to $80 per year. 
B) The likelihood that the firm issuing your bond will default on debt increases. 
C) The price of a share of stock in the company falls. 
D) Coupon payments on newly-issued bonds fall to $50 per year.

Question 14

How do a sole proprietorship and a corporation differ?

Accepted Answer

A) Proprietorships have unlimited liability while corporations have limited liability. 
B) Corporations can issue stocks and bonds,while proprietorships cannot. 
C) Corporations face more taxes than do proprietorships. 
D) All of these are differences between the two types of businesses. 
A) Proprietorships have unlimited liability while corporations have limited liability. 
B) Corporations can issue stocks and bonds,while proprietorships cannot. 
C) Corporations face more taxes than do proprietorships. 
D) All of these are differences between the two types of businesses.

Question 15

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?

Accepted Answer

A) $150,000 
B) $350,000 
C) $600,000 
D) $1.2 million 
A) $150,000 
B) $350,000 
C) $600,000 
D) $1.2 million

Question 16

What is the Congressional act,enacted in 1933 and repealed in 1999,which prevented financial firms from being both commercial banks and investment banks?

Accepted Answer

A) the Sarbanes-Oxley Act 
B) the Glass-Steagall Act 
C) the Taft-Hartley Act 
D) the Cellar-Kefauver Act 
A) the Sarbanes-Oxley Act 
B) the Glass-Steagall Act 
C) the Taft-Hartley Act 
D) the Cellar-Kefauver Act

Question 17

The only type of business that faces limited liability is a corporation.

Accepted Answer

A) True 
 B)False

Question 18

Scott is a manager at a pool cleaning business.He has hired 10 workers to clean pools for him and is considering what type of payment scheme he should set up for his workers.He can pay each of his workers $10 per hour to clean pools,or he can pay his workers $20 for each pool a worker cleans.(It takes 2 hours,on average,for an employee to clean a pool thoroughly.)If Scott wants to maximize the number of pools his workers clean in one day,which payment scheme should he use? Explain.

Accepted Answer

If Scott wants to maximize the number of

Question 19

An asset is

Accepted Answer

A) anything of value owned by a person or a firm. 
B) a payment by a corporation to its shareholders. 
C) a nonmonetary opportunity cost. 
D) anything owed by a person or a firm. 
A) anything of value owned by a person or a firm. 
B) a payment by a corporation to its shareholders. 
C) a nonmonetary opportunity cost. 
D) anything owed by a person or a firm.

Question 20

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

Accepted Answer

A) the Dow Jones Industrial Average. 
B) the S&P 500. 
C) the Fortune 500. 
D) The NASDAQ. 
A) the Dow Jones Industrial Average. 
B) the S&P 500. 
C) the Fortune 500. 
D) The NASDAQ.

A nonmonetary opportunity cost is called a(n),while a cost that involves spending money is called a(n).

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

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

The volatility of a stock's market price is indicated by

Which type of business has the least government rules and regulations affecting it?

Securities dealers that trade stocks and bonds outside exchanges comprise the

Which of the following is not an advantage of starting a new business as a proprietorship?

A partnership is ________ type of business.

Which of the following does not take place in the direct finance market?

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

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

Purchasing a firm's stock in an IPO can be risky because financial information may not be fully disclosed.

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

How do a sole proprietorship and a corporation differ?

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?

What is the Congressional act,enacted in 1933 and repealed in 1999,which prevented financial firms from being both commercial banks and investment banks?

The only type of business that faces limited liability is a corporation.

An asset is

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

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

A nonmonetary opportunity cost is called a(n)________,while a cost that involves spending money is called a(n)________.

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

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

The volatility of a stock's market price is indicated by

Which type of business has the least government rules and regulations affecting it?

Securities dealers that trade stocks and bonds outside exchanges comprise the

Which of the following is not an advantage of starting a new business as a proprietorship?

A partnership is ________ type of business.

Which of the following does not take place in the direct finance market?

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

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

Purchasing a firm's stock in an IPO can be risky because financial information may not be fully disclosed.

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

How do a sole proprietorship and a corporation differ?

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?

What is the Congressional act,enacted in 1933 and repealed in 1999,which prevented financial firms from being both commercial banks and investment banks?

The only type of business that faces limited liability is a corporation.

An asset is

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

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

A nonmonetary opportunity cost is called a(n),while a cost that involves spending money is called a(n).