Question 1

Corporations are legally owned by their shareholders.

Accepted Answer

A) True 
 B)False

Question 2

How can a partnership raise funds needed for firm expansion?

Accepted Answer

By retaining earning

Question 3

Indirect finance includes the sale by a corporation of stocks or bonds,but does not include borrowing money from a bank.

Accepted Answer

A) True 
 B)False

Question 4

What is a primary market?

Accepted Answer

A) a market where primary inputs like steel are sold 
B) a market where you can sell any bonds you own as a private investor 
C) a market where a newly issued claims are sold to initial buyers by the borrowing firm 
D) a market where you can sell any stocks you own as a private investor 
A) a market where primary inputs like steel are sold 
B) a market where you can sell any bonds you own as a private investor 
C) a market where a newly issued claims are sold to initial buyers by the borrowing firm 
D) a market where you can sell any stocks you own as a private investor

Question 5

The coupon rate of a bond is equal to

Accepted Answer

A) the coupon payment. 
B) the interest payment. 
C) the interest rate. 
D) the face value. 
A) the coupon payment. 
B) the interest payment. 
C) the interest rate. 
D) the face value.

Question 6

The financial statements of firms generally are audited by

Accepted Answer

A) employees of the firm being audited. 
B) employees of private accounting firms. 
C) employees of the federal government. 
D) the board of directors of the corporation being audited. 
A) employees of the firm being audited. 
B) employees of private accounting firms. 
C) employees of the federal government. 
D) the board of directors of the corporation being audited.

Question 7

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

Accepted Answer

They allocate saved

Question 8

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues.Based on this information,what is accounting profit for Laura's Pizza Place?

Accepted Answer

A) $200,000 
B) $400,000 
C) $500,000 
D) $900,000 
A) $200,000 
B) $400,000 
C) $500,000 
D) $900,000

Question 9

Which of the following is a characteristic of a bond?

Accepted Answer

A) A bond represents a promise to repay a fixed amount of funds. 
B) The face value or principal plus interest is repaid at a specified period of time. 
C) The length of coupon payments is fixed by the stated maturity period. 
D) All of these are characteristic of bonds. 
A) A bond represents a promise to repay a fixed amount of funds. 
B) The face value or principal plus interest is repaid at a specified period of time. 
C) The length of coupon payments is fixed by the stated maturity period. 
D) All of these are characteristic of bonds.

Question 10

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

Accepted Answer

A) the stock prices of 500 large U.S.firms. 
B) an over-the-counter market. 
C) the stock prices of more than 4,000 U.S.firms. 
D) the stock prices of 30 large U.S.corporations. 
A) the stock prices of 500 large U.S.firms. 
B) an over-the-counter market. 
C) the stock prices of more than 4,000 U.S.firms. 
D) the stock prices of 30 large U.S.corporations.

Question 11

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues and has $5 million in net worth.Based on this information,what is economic profit for Laura's Pizza Place?

Accepted Answer

A) $200,000 
B) $400,000 
C) $500,000 
D) $2.8 million 
A) $200,000 
B) $400,000 
C) $500,000 
D) $2.8 million

Question 12

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

Accepted Answer

A) interest on 
B) face value of 
C) coupon payment on 
D) dividend payment on 
A) interest on 
B) face value of 
C) coupon payment on 
D) dividend payment on

Question 13

Economic profit is the difference between a firm's revenue and its opportunity costs.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) the creation and printing of money 
B) keeping the price level stable 
C) bringing together savers and borrowers 
D) providing safe deposit boxes for people and businesses 
A) the creation and printing of money 
B) keeping the price level stable 
C) bringing together savers and borrowers 
D) providing safe deposit boxes for people and businesses

Question 15

When someone takes out a mortgage loan to buy a house,the mortgage lender can take possession of the house and sell it if the borrower defaults by failing to make payments on the loan because the house is being pledged as ________ for the loan.

Accepted Answer

A) goodwill 
B) a liability 
C) insurance 
D) collateral 
A) goodwill 
B) a liability 
C) insurance 
D) collateral

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

A stock's dividend yield is determined by

Accepted Answer

A) dividing the dividend payment by the stock's initial price. 
B) dividing the dividend payment by the stock's closing market price. 
C) dividing the stock's closing market price by the dividend payment. 
D) subtracting the stock's initial purchase price from the stocks' closing market price on a given day. 
A) dividing the dividend payment by the stock's initial price. 
B) dividing the dividend payment by the stock's closing market price. 
C) dividing the stock's closing market price by the dividend payment. 
D) subtracting the stock's initial purchase price from the stocks' closing market price on a given day.

Question 18

What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

Accepted Answer

A) conquest and control 
B) a financial problem 
C) a principal-agent problem 
D) a financial intermediary problem 
A) conquest and control 
B) a financial problem 
C) a principal-agent problem 
D) a financial intermediary problem

Question 19

With state and multistate lotteries,winners are typically given the choice between a lump sum payment today or a 20 year series of annuities.How should a winner decide which is better?

Accepted Answer

The winner should decide by de

Question 20

Of the different types of businesses,a corporation has the ________ government rules and the ________ government regulations affecting it.

Accepted Answer

A) least; least 
B) least; most 
C) most; least 
D) most; most 
A) least; least 
B) least; most 
C) most; least 
D) most; most

Corporations are legally owned by their shareholders.

How can a partnership raise funds needed for firm expansion?

Indirect finance includes the sale by a corporation of stocks or bonds,but does not include borrowing money from a bank.

What is a primary market?

The coupon rate of a bond is equal to

The financial statements of firms generally are audited by

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

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues.Based on this information,what is accounting profit for Laura's Pizza Place?

Which of the following is a characteristic of a bond?

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues and has $5 million in net worth.Based on this information,what is economic profit for Laura's Pizza Place?

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

Economic profit is the difference between a firm's revenue and its opportunity costs.

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

When someone takes out a mortgage loan to buy a house,the mortgage lender can take possession of the house and sell it if the borrower defaults by failing to make payments on the loan because the house is being pledged as ________ for the loan.

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.

A stock's dividend yield is determined by

What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

With state and multistate lotteries,winners are typically given the choice between a lump sum payment today or a 20 year series of annuities.How should a winner decide which is better?

Of the different types of businesses,a corporation has the government rules and the government regulations affecting it.

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

Corporations are legally owned by their shareholders.

How can a partnership raise funds needed for firm expansion?

Indirect finance includes the sale by a corporation of stocks or bonds,but does not include borrowing money from a bank.

What is a primary market?

The coupon rate of a bond is equal to

The financial statements of firms generally are audited by

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

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues.Based on this information,what is accounting profit for Laura's Pizza Place?

Which of the following is a characteristic of a bond?

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs.The restaurant earns $1.3 million in revenues and has $5 million in net worth.Based on this information,what is economic profit for Laura's Pizza Place?

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

Economic profit is the difference between a firm's revenue and its opportunity costs.

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

When someone takes out a mortgage loan to buy a house,the mortgage lender can take possession of the house and sell it if the borrower defaults by failing to make payments on the loan because the house is being pledged as ________ for the loan.

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.

A stock's dividend yield is determined by

What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

With state and multistate lotteries,winners are typically given the choice between a lump sum payment today or a 20 year series of annuities.How should a winner decide which is better?

Of the different types of businesses,a corporation has the ________ government rules and the ________ government regulations affecting it.

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

Of the different types of businesses,a corporation has the government rules and the government regulations affecting it.