Question 1

In a typical year,________ of new jobs are created by small firms.

Accepted Answer

A) less than 5 percent 
B) 10 percent 
C) 40 percent 
D) 75 percent 
A) less than 5 percent 
B) 10 percent 
C) 40 percent 
D) 75 percent

Question 2

What is a corporate bond and what does it specify?

Accepted Answer

A bond is a promise to repay a

Question 3

Corporate governance involves the way in which

Accepted Answer

A) the government nationalizes corporations. 
B) the government licenses corporations. 
C) a corporation is subject to government regulations. 
D) a corporation is structured. 
A) the government nationalizes corporations. 
B) the government licenses corporations. 
C) a corporation is subject to government regulations. 
D) a corporation is structured.

Question 4

What is accounting profit?

Accepted Answer

A) gross revenue minus explicit costs 
B) gross revenue minus implicit costs 
C) gross revenue minus explicit and implicit costs 
D) the same as economic profit 
A) gross revenue minus explicit costs 
B) gross revenue minus implicit costs 
C) gross revenue minus explicit and implicit costs 
D) the same as economic profit

Question 5

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

Accepted Answer

A) 2.5% 
B) 4% 
C) 25% 
D) 40% 
A) 2.5% 
B) 4% 
C) 25% 
D) 40%

Question 6

Direct 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 7

If Southwest Airlines borrows $20 million from a bank to finance the renovation of their corporate offices,this is an example of

Accepted Answer

A) a bond market transaction. 
B) indirect finance. 
C) a stock market transaction. 
D) direct finance. 
A) a bond market transaction. 
B) indirect finance. 
C) a stock market transaction. 
D) direct finance.

Question 8

A bond's coupon payment divided by the bond's current price is equal to the bond's

Accepted Answer

A) dividend yield. 
B) current yield. 
C) price-earnings ratio. 
D) maturity value. 
A) dividend yield. 
B) current yield. 
C) price-earnings ratio. 
D) maturity value.

Question 9

Total dividend payments plus retained earnings divided by outstanding stock shares equals

Accepted Answer

A) the price-earnings ratio. 
B) earnings per share. 
C) the dividend yield. 
D) the year-to-date percentage change. 
A) the price-earnings ratio. 
B) earnings per share. 
C) the dividend yield. 
D) the year-to-date percentage change.

Question 10

Included on the board of directors of Microsoft are Dina Dublon,former chief financial officer of JP Morgan Chase,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

Accepted Answer

A) inside directors. 
B) outside directors. 
C) competitive directors. 
D) honorary directors. 
A) inside directors. 
B) outside directors. 
C) competitive directors. 
D) honorary directors.

Question 11

Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year,the explicit costs of her business are $17,000,and the opportunity costs of her business are $22,000.What are the implicit costs of her business?

Accepted Answer

A) $17,000 
B) $22,000 
C) $39,000 
D) $47,000 
A) $17,000 
B) $22,000 
C) $39,000 
D) $47,000

Question 12

Who hires the managers of a corporation?

Accepted Answer

A) the board of directors 
B) stockholders 
C) managers 
D) employees 
A) the board of directors 
B) stockholders 
C) managers 
D) employees

Question 13

A corporation is the type of business has ________ government rules and regulations affecting it.

Accepted Answer

A) no 
B) the fewest 
C) the most 
D) only federal 
A) no 
B) the fewest 
C) the most 
D) only federal

Question 14

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 accounting 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 15

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a sole proprietorship.What is one advantage to Jeremy of setting up his business as a sole proprietorship?

Accepted Answer

A) As a sole proprietor,Jeremy would face limited liability. 
B) As a sole proprietor,Jeremy would have the ability to share risk with shareholders. 
C) As a sole proprietor,Jeremy would have both ownership and control over the business. 
D) All of the above would be advantages of setting up his business as a sole proprietorship. 
A) As a sole proprietor,Jeremy would face limited liability. 
B) As a sole proprietor,Jeremy would have the ability to share risk with shareholders. 
C) As a sole proprietor,Jeremy would have both ownership and control over the business. 
D) All of the above would be advantages of setting up his business as a sole proprietorship.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

What is different about buying stocks and buying bonds?

Accepted Answer

A) A stock can possibly pay dividends forever,but bonds have a fixed number of payments. 
B) Differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future. 
C) The future growth of a stock is more uncertain than the payments of a bond. 
D) All these are differences between stocks and bonds. 
A) A stock can possibly pay dividends forever,but bonds have a fixed number of payments. 
B) Differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future. 
C) The future growth of a stock is more uncertain than the payments of a bond. 
D) All these are differences between stocks and bonds.

Question 18

A member of a corporate board of directors that is also a manager of the business is known as

Accepted Answer

A) a shareholder. 
B) an inside director. 
C) a partner. 
D) a corporate governor. 
A) a shareholder. 
B) an inside director. 
C) a partner. 
D) a corporate governor.

Question 19

What is the primary difference between a sole proprietorship and a partnership?

Accepted Answer

A) Proprietorships have unlimited liability while partnerships have limited liability. 
B) Partnerships can issue stocks and bonds while proprietorships cannot. 
C) Partnerships have more owners than do proprietorships. 
D) There is no real difference between the two types of firms. 
A) Proprietorships have unlimited liability while partnerships have limited liability. 
B) Partnerships can issue stocks and bonds while proprietorships cannot. 
C) Partnerships have more owners than do proprietorships. 
D) There is no real difference between the two types of firms.

Question 20

A firm in a market economy must do all of the following to succeed except

Accepted Answer

A) produce the goods and services that consumers want at a lower cost than consumers themselves can produce. 
B) organize the factors of production into a functioning,efficient unit. 
C) have access to sufficient funds. 
D) be organized as a corporation. 
A) produce the goods and services that consumers want at a lower cost than consumers themselves can produce. 
B) organize the factors of production into a functioning,efficient unit. 
C) have access to sufficient funds. 
D) be organized as a corporation.

In a typical year,________ of new jobs are created by small firms.

What is a corporate bond and what does it specify?

Corporate governance involves the way in which

What is accounting profit?

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

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

If Southwest Airlines borrows $20 million from a bank to finance the renovation of their corporate offices,this is an example of

A bond's coupon payment divided by the bond's current price is equal to the bond's

Total dividend payments plus retained earnings divided by outstanding stock shares equals

Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year,the explicit costs of her business are $17,000,and the opportunity costs of her business are $22,000.What are the implicit costs of her business?

Who hires the managers of a corporation?

A corporation is the type of business has ________ government rules and regulations affecting it.

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 accounting profit for Donnie's Donuts?

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a sole proprietorship.What is one advantage to Jeremy of setting up his business as a sole proprietorship?

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

What is different about buying stocks and buying bonds?

A member of a corporate board of directors that is also a manager of the business is known as

What is the primary difference between a sole proprietorship and a partnership?

A firm in a market economy must do all of the following to succeed 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

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

In a typical year,________ of new jobs are created by small firms.

What is a corporate bond and what does it specify?

Corporate governance involves the way in which

What is accounting profit?

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

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

If Southwest Airlines borrows $20 million from a bank to finance the renovation of their corporate offices,this is an example of

A bond's coupon payment divided by the bond's current price is equal to the bond's

Total dividend payments plus retained earnings divided by outstanding stock shares equals

Tanesha sells homemade candles over the Internet.Her annual revenue is $64,000 per year,the explicit costs of her business are $17,000,and the opportunity costs of her business are $22,000.What are the implicit costs of her business?

Who hires the managers of a corporation?

A corporation is the type of business has ________ government rules and regulations affecting it.

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 accounting profit for Donnie's Donuts?

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a sole proprietorship.What is one advantage to Jeremy of setting up his business as a sole proprietorship?

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

What is different about buying stocks and buying bonds?

A member of a corporate board of directors that is also a manager of the business is known as

What is the primary difference between a sole proprietorship and a partnership?

A firm in a market economy must do all of the following to succeed 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