Exam 6: Firms,the Stock Market,and Corporate Governance

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On average,jobs at small firms pay ________ wages than jobs at large firms and are ________ likely to offer fringe benefits such as health insurance and retirement accounts.

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In October 2013,Abercrombie & Fitch (ANF)posted a price-earnings ratio of 13.If the price of the stock at that time was $36 per share,which of the following must have been true?

(Multiple Choice)
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Anything owed by a person or a firm is

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All of the following would be considered explicit costs of operating a business except

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How do firms raise external funds through indirect finance?

(Essay)
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The profits a corporation keeps to finance future expansion are known as

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Define a sole proprietorship.

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

(Multiple Choice)
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An increase in liabilities will reduce a firm's net worth.

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A normal rate of return refers to the ________ that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested.

(Multiple Choice)
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Members of management serving on the board of directors of a corporation are referred to as outside directors.

(True/False)
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Dividing the current market price of a stock by the firm's earnings per share gives the firm's

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A decrease in liabilities will reduce a firm's net worth.

(True/False)
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The only type of business that faces unlimited liability is a sole proprietorship.

(True/False)
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Traditionally,Wall Street investment banks had been organized as partnerships,but by 2000 they had converted to being publicly traded corporations.As partnerships,the principle-agent problem is ________,but as publicly traded corporations,the principal-agent problem is often ________.

(Multiple Choice)
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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%?

(Multiple Choice)
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Anything of value owned by a person or a firm is

(Multiple Choice)
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What are the advantages of setting up a corporation as opposed to a proprietorship or partnership?

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

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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?

(Multiple Choice)
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