Question 1

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 2

The owners of a ________ have a separate legal distinction from the business.

Accepted Answer

A) corporation 
B) partnership 
C) sole proprietorship 
D) All of the above are correct. 
A) corporation 
B) partnership 
C) sole proprietorship 
D) All of the above are correct.

Question 3

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

Accepted Answer

A) You are liable for organizing the business. 
B) You could stand to lose your personal wealth if the business goes bankrupt. 
C) There is no legal responsibility of the business in case a customer sues,as the business is legally untouchable. 
D) None of these explain what unlimited liability means. 
A) You are liable for organizing the business. 
B) You could stand to lose your personal wealth if the business goes bankrupt. 
C) There is no legal responsibility of the business in case a customer sues,as the business is legally untouchable. 
D) None of these explain what unlimited liability means.

Question 4

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 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

As a business type,corporations ________ in the United States.

Accepted Answer

A) earn the majority of profits 
B) are the most common 
C) are the least common 
D) are subject to the least amount of taxes 
A) earn the majority of profits 
B) are the most common 
C) are the least common 
D) are subject to the least amount of taxes

Question 7

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 8

Which is the least common type of business?

Accepted Answer

A) corporation 
B) partnership 
C) sole proprietorship 
D) impossible to determine without further information 
A) corporation 
B) partnership 
C) sole proprietorship 
D) impossible to determine without further information

Question 9

How does the owner of a sole proprietorship relate to the business?

Accepted Answer

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

Question 10

During 2007,many "subprime" and "Alt-A" borrowers began to default on their mortgages.Describe "subprime" and "Alt-A" borrowers.

Accepted Answer

"Subprime" borrowers are borrowers whose

Question 11

The Sarbanes-Oxley Act of 2002 was passed in response to what event?

Accepted Answer

A) a series of accounting scandals 
B) unexpected increases in dividend payments to stockholders at various corporations 
C) volatility in NASDAQ indexes 
D) historically low bond prices 
A) a series of accounting scandals 
B) unexpected increases in dividend payments to stockholders at various corporations 
C) volatility in NASDAQ indexes 
D) historically low bond prices

Question 12

What happens in the secondary market?

Accepted Answer

A) secondary inputs like electricity are sold 
B) a corporate financial manager will raise funds for expansion of the firm 
C) newly issued claims are sold by the borrowing firm to the initial buyer 
D) already issued claims are sold from one investor to another 
A) secondary inputs like electricity are sold 
B) a corporate financial manager will raise funds for expansion of the firm 
C) newly issued claims are sold by the borrowing firm to the initial buyer 
D) already issued claims are sold from one investor to another

Question 13

Owners of a corporation share in the profits of the firm

Accepted Answer

A) by selling any bonds or stocks owned and realizing a capital gain. 
B) through coupon payments on that firm's bonds. 
C) through dividend payments on shares of that firm's stock. 
D) by raising the interest rate on bonds. 
A) by selling any bonds or stocks owned and realizing a capital gain. 
B) through coupon payments on that firm's bonds. 
C) through dividend payments on shares of that firm's stock. 
D) by raising the interest rate on bonds.

Question 14

What is the difference between explicit and implicit costs?

Accepted Answer

Explicit costs are out-of-pock

Question 15

How are corporate profits taxed in the United States?

Accepted Answer

A) Earnings are taxed first by state sales taxes and then as corporate profits at the Federal level. 
B) Earnings are taxed first as personal income then as corporate profits at the Federal level. 
C) Earnings are taxed first as corporate profits then as personal income after dividends are paid. 
D) Corporate profits are not taxed at all. 
A) Earnings are taxed first by state sales taxes and then as corporate profits at the Federal level. 
B) Earnings are taxed first as personal income then as corporate profits at the Federal level. 
C) Earnings are taxed first as corporate profits then as personal income after dividends are paid. 
D) Corporate profits are not taxed at all.

Question 16

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.

Question 17

Before its IPO,Facebook was an example of a private firm.As a private firm,Facebook was

Accepted Answer

A) not subject to government regulations and taxation. 
B) run by stockholders and a board of directors. 
C) run by its founder,Mark Zuckerberg. 
D) not legally allowed to raise funds through venture capital firms. 
A) not subject to government regulations and taxation. 
B) run by stockholders and a board of directors. 
C) run by its founder,Mark Zuckerberg. 
D) not legally allowed to raise funds through venture capital firms.

Question 18

Who controls a sole proprietorship?

Accepted Answer

A) stockholders 
B) bondholders 
C) the owner 
D) all of these 
A) stockholders 
B) bondholders 
C) the owner 
D) all of these

Question 19

Goodwill is listed as an asset on a firm's balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

________ is called an implicit cost,while ________ is called an explicit cost.

Accepted Answer

A) An accounting cost; an economic cost 
B) A nonmonetary opportunity cost; a cost that involves spending money 
C) A production cost; a sales cost 
D) An actual cost; a hypothetical cost 
A) An accounting cost; an economic cost 
B) A nonmonetary opportunity cost; a cost that involves spending money 
C) A production cost; a sales cost 
D) An actual cost; a hypothetical cost

In the United States,corporate profits are taxed

The owners of a ________ have a separate legal distinction from the business.

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

A corporation's management

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

As a business type,corporations ________ in the United States.

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?

Which is the least common type of business?

How does the owner of a sole proprietorship relate to the business?

During 2007,many "subprime" and "Alt-A" borrowers began to default on their mortgages.Describe "subprime" and "Alt-A" borrowers.

The Sarbanes-Oxley Act of 2002 was passed in response to what event?

What happens in the secondary market?

Owners of a corporation share in the profits of the firm

What is the difference between explicit and implicit costs?

How are corporate profits taxed in the United States?

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

Before its IPO,Facebook was an example of a private firm.As a private firm,Facebook was

Who controls a sole proprietorship?

Goodwill is listed as an asset on a firm's balance sheet.

is called an implicit cost,while is called an explicit cost.

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

In the United States,corporate profits are taxed

The owners of a ________ have a separate legal distinction from the business.

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability.What does that mean?

A corporation's management

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

As a business type,corporations ________ in the United States.

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?

Which is the least common type of business?

How does the owner of a sole proprietorship relate to the business?

During 2007,many "subprime" and "Alt-A" borrowers began to default on their mortgages.Describe "subprime" and "Alt-A" borrowers.

The Sarbanes-Oxley Act of 2002 was passed in response to what event?

What happens in the secondary market?

Owners of a corporation share in the profits of the firm

What is the difference between explicit and implicit costs?

How are corporate profits taxed in the United States?

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

Before its IPO,Facebook was an example of a private firm.As a private firm,Facebook was

Who controls a sole proprietorship?

Goodwill is listed as an asset on a firm's balance sheet.

________ is called an implicit cost,while ________ is called an explicit cost.

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

is called an implicit cost,while is called an explicit cost.