Question 1

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 A

Question 2

Generally with bond ratings,the higher the rating,the ________ the interest rate an investor will receive and the ________ the the risk that the issuer of the bond will default.

Accepted Answer

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

Question 3

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 B

Question 4

A nonmonetary opportunity cost is called a(n)________,while a cost that involves spending money is called a(n)________.

Accepted Answer

A)  accounting cost; explicit cost 
B)  implicit cost; explicit cost 
C)  accounting profit; economic profit 
D)  normal rate of return; asset 
A)  accounting cost; explicit cost 
B)  implicit cost; explicit cost 
C)  accounting profit; economic profit 
D)  normal rate of return; asset

Question 5

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 6

Dividing the current market price of a stock by the firm's earnings per share gives the firm's

Accepted Answer

A)  price-earnings ratio. 
B)  year-to-date percentage change. 
C)  dividend yield. 
D)  stock coupon maturity yield. 
A)  price-earnings ratio. 
B)  year-to-date percentage change. 
C)  dividend yield. 
D)  stock coupon maturity yield.

Question 7

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 8

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

Accepted Answer

The Sarbanes-Oxley Act of 2002 was enact

Question 9

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 10

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 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 is her economic profit?

Accepted Answer

A)  $17,000 
B)  $25,000 
C)  $42,000 
D)  $47,000 
A)  $17,000 
B)  $25,000 
C)  $42,000 
D)  $47,000

Question 12

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 13

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 14

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 15

When you buy newly-issued shares of Google stock,this transaction takes place in the

Accepted Answer

A)  primary market. 
B)  bond market. 
C)  secondary market. 
D)  bear market. 
A)  primary market. 
B)  bond market. 
C)  secondary market. 
D)  bear market.

Question 16

When a business is set up as a sole proprietorship,the owner of the business faces limited liability.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 19

A firm's net income is also its

Accepted Answer

A)  economic profit. 
B)  balance sheet. 
C)  accounting profit. 
D)  opportunity cost. 
A)  economic profit. 
B)  balance sheet. 
C)  accounting profit. 
D)  opportunity cost.

Question 20

When Internet coupon site Groupon sold stock to the public for the first time,funds were being raised in a ________ market,and when those newly issued shares are resold to other buyers,the sales take place in a ________ market.

Accepted Answer

A)  primary; primary 
B)  primary; secondary 
C)  secondary; primary 
D)  secondary; secondary 
A)  primary; primary 
B)  primary; secondary 
C)  secondary; primary 
D)  secondary; secondary

Exam 8: Firms, the Stock Market, and Corporate Governance

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

Generally with bond ratings,the higher the rating,the ________ the interest rate an investor will receive and the ________ the the risk that the issuer of the bond will default.

Eighty-five percent of all firms employ ________ workers.

A nonmonetary opportunity cost is called a(n)________,while a cost that involves spending money is called a(n)________.

Corporate governance involves the way in which

Dividing the current market price of a stock by the firm's earnings per share gives the firm's

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

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

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?

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?

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 is her economic profit?

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

What is accounting profit?

Who controls a sole proprietorship?

When you buy newly-issued shares of Google stock,this transaction takes place in the

When a business is set up as a sole proprietorship,the owner of the business faces limited liability.

As a form of business,a partnership

A firm's net income is also its

When Internet coupon site Groupon sold stock to the public for the first time,funds were being raised in a ________ market,and when those newly issued shares are resold to other buyers,the sales take place in a ________ market.

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

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

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

Generally with bond ratings,the higher the rating,the the interest rate an investor will receive and the the the risk that the issuer of the bond will default.

A nonmonetary opportunity cost is called a(n),while a cost that involves spending money is called a(n).

When Internet coupon site Groupon sold stock to the public for the first time,funds were being raised in a market,and when those newly issued shares are resold to other buyers,the sales take place in a market.