Question 1

A firm's accounting profit is also its

Accepted Answer

A) economic profit. 
B) income statement. 
C) net income. 
D) statement of liabilities. 
A) economic profit. 
B) income statement. 
C) net income. 
D) statement of liabilities.

Question 2

What is corporate governance?

Accepted Answer

Corporate governance refers to

Question 3

A firm's net worth is calculated as

Accepted Answer

A) the difference between a firm's revenues and explicit costs. 
B) the difference between a firm's revenues and implicit costs. 
C) the difference between a firm's assets and liabilities. 
D) the difference between a firm's liabilities and outstanding equities. 
A) the difference between a firm's revenues and explicit costs. 
B) the difference between a firm's revenues and implicit costs. 
C) the difference between a firm's assets and liabilities. 
D) the difference between a firm's liabilities and outstanding equities.

Question 4

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

Accepted Answer

A) If the retained earnings are expected to create future profits,the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold. 
B) Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments. 
C) Owners will only benefit if some profits are paid out in the form of dividends. 
D) Owners will benefit by changing the board of directors. 
A) If the retained earnings are expected to create future profits,the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold. 
B) Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments. 
C) Owners will only benefit if some profits are paid out in the form of dividends. 
D) Owners will benefit by changing the board of directors.

Question 5

Which of the following is a characteristic of stock?

Accepted Answer

A) Stock 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) Stock represents ownership in a firm. 
A) Stock 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) Stock represents ownership in a firm.

Question 6

In a typical year,________ new firms open in the United States.

Accepted Answer

A) more than 600,000 
B) more than 1 million 
C) less than 200,000 
D) approximately 125,000 
A) more than 600,000 
B) more than 1 million 
C) less than 200,000 
D) approximately 125,000

Question 7

If a corporate bond with face value of $5,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

Accepted Answer

A) $4 
B) $200 
C) $1,250 
D) $5,000 
A) $4 
B) $200 
C) $1,250 
D) $5,000

Question 8

Define a partnership.

Accepted Answer

A partnership is a f

Question 9

What is a firm's balance sheet?

Accepted Answer

A firm's balance sheet is a fi

Question 10

The central role of ________ in a market economy is bringing together savers and borrowers.

Accepted Answer

A) corporations 
B) sole proprietors 
C) financial intermediaries 
D) stock exchanges 
A) corporations 
B) sole proprietors 
C) financial intermediaries 
D) stock exchanges

Question 11

In response to accounting scandals in 2002,the federal government passed legislation requiring that corporate directors have a certain level of expertise with financial information and mandating that chief executive officers personally certify the accuracy of financial statements.What is the name of this legislation?

Accepted Answer

A) the Accountant Reliability Act 
B) the 24th amendment to the Constitution 
C) the Kennedy-Lott Act 
D) the Sarbanes-Oxley Act 
A) the Accountant Reliability Act 
B) the 24th amendment to the Constitution 
C) the Kennedy-Lott Act 
D) the Sarbanes-Oxley Act

Question 12

If a corporation earns a profit,how do owners of the firm share in the profit?

Accepted Answer

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

Question 13

What do the highest stock price and the lowest stock price over the previous year indicate?

Accepted Answer

A) Add them together and divide by two to get the stock's current market price. 
B) What the stock's price-earnings ratio is 
C) How volatile the stock's market price has been 
D) They generate the dividend yield. 
A) Add them together and divide by two to get the stock's current market price. 
B) What the stock's price-earnings ratio is 
C) How volatile the stock's market price has been 
D) They generate the dividend yield.

Question 14

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were ________ than they actually were,resulting in reported accounting profits for WorldCom that were ________ than their actual level.

Accepted Answer

A) higher; higher 
B) lower; higher 
C) lower; lower 
D) higher; lower 
A) higher; higher 
B) lower; higher 
C) lower; lower 
D) higher; lower

Question 15

Unlike firms that sell stock in financial markets,which are known as ________ firms,companies which do not sell stock in financial markets are known as ________ firms.

Accepted Answer

A) public; private 
B) open; closed 
C) corporate; proprietary 
D) stock market; bond market 
A) public; private 
B) open; closed 
C) corporate; proprietary 
D) stock market; bond market

Question 16

As a form of business,a partnership

Accepted Answer

A) has limited liability. 
B) has only one owner. 
C) cannot issue stock. 
D) has the most government rules and regulations affecting it. 
A) has limited liability. 
B) has only one owner. 
C) cannot issue stock. 
D) has the most government rules and regulations affecting it.

Question 17

Eighty-five percent of all firms employ ________ workers.

Accepted Answer

A) only one or two 
B) fewer than 20 
C) 50 or more 
D) over 100 
A) only one or two 
B) fewer than 20 
C) 50 or more 
D) over 100

Question 18

Briefly describe the Sarbanes-Oxley Act and explain why it was passed.

Accepted Answer

The Sarbanes-Oxley Act of 2002 was enact

Question 19

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

Accepted Answer

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

Question 20

How much is a bond that pays $50 in coupon payments for 3 years and $1,000 at the end of the third year worth if the interest rate is 10%?

Accepted Answer

A) $876 
B) $952 
C) $1,045 
D) $1,150 
A) $876 
B) $952 
C) $1,045 
D) $1,150

A firm's accounting profit is also its

What is corporate governance?

A firm's net worth is calculated as

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

Which of the following is a characteristic of stock?

In a typical year,________ new firms open in the United States.

If a corporate bond with face value of $5,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

Define a partnership.

What is a firm's balance sheet?

The central role of ________ in a market economy is bringing together savers and borrowers.

If a corporation earns a profit,how do owners of the firm share in the profit?

What do the highest stock price and the lowest stock price over the previous year indicate?

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were than they actually were,resulting in reported accounting profits for WorldCom that were than their actual level.

Unlike firms that sell stock in financial markets,which are known as firms,companies which do not sell stock in financial markets are known as firms.

As a form of business,a partnership

Eighty-five percent of all firms employ ________ workers.

Briefly describe the Sarbanes-Oxley Act and explain why it was passed.

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

How much is a bond that pays $50 in coupon payments for 3 years and $1,000 at the end of the third year worth if the interest rate is 10%?

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 firm's accounting profit is also its

What is corporate governance?

A firm's net worth is calculated as

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?

Which of the following is a characteristic of stock?

In a typical year,________ new firms open in the United States.

If a corporate bond with face value of $5,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

Define a partnership.

What is a firm's balance sheet?

The central role of ________ in a market economy is bringing together savers and borrowers.

If a corporation earns a profit,how do owners of the firm share in the profit?

What do the highest stock price and the lowest stock price over the previous year indicate?

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were ________ than they actually were,resulting in reported accounting profits for WorldCom that were ________ than their actual level.

Unlike firms that sell stock in financial markets,which are known as ________ firms,companies which do not sell stock in financial markets are known as ________ firms.

As a form of business,a partnership

Eighty-five percent of all firms employ ________ workers.

Briefly describe the Sarbanes-Oxley Act and explain why it was passed.

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

How much is a bond that pays $50 in coupon payments for 3 years and $1,000 at the end of the third year worth if the interest rate is 10%?

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

David Myers,former controller for WorldCom,pleaded guilty to falsely reported costs for WorldCom that were than they actually were,resulting in reported accounting profits for WorldCom that were than their actual level.

Unlike firms that sell stock in financial markets,which are known as firms,companies which do not sell stock in financial markets are known as firms.