Question 1

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 2

All of the following would be considered explicit costs of operating a business except

Accepted Answer

A)  rent paid to a landlord. 
B)  bonuses paid to employees. 
C)  a normal rate of return for investors. 
D)  corporate income taxes. 
A)  rent paid to a landlord. 
B)  bonuses paid to employees. 
C)  a normal rate of return for investors. 
D)  corporate income taxes.

Question 3

Which type of business is the most difficult to set up?

Accepted Answer

A)  sole proprietorship 
B)  partnership 
C)  corporation 
D)  There is no difference in the difficulty of establishment. 
A)  sole proprietorship 
B)  partnership 
C)  corporation 
D)  There is no difference in the difficulty of establishment.

Question 4

When groups of mortgages are bundled together by financial institutions and sold to investors,these institutions are said to be ________ mortgage loans.

Accepted Answer

A)  securitizing 
B)  underwriting 
C)  liquidating 
D)  harvesting 
A)  securitizing 
B)  underwriting 
C)  liquidating 
D)  harvesting

Question 5

A sole proprietorship is

Accepted Answer

A)  the easiest type of business to set up. 
B)  the most difficult type of business to set up. 
C)  the most expensive type of business to set up. 
D)  the least profitable type of business to set up. 
A)  the easiest type of business to set up. 
B)  the most difficult type of business to set up. 
C)  the most expensive type of business to set up. 
D)  the least profitable type of business to set up.

Question 6

Explain the relationships between a corporation's shareholders,its board of directors,and its top managers.

Accepted Answer

Shareholders are the legal owners of a c

Question 7

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 8

Define a partnership.

Accepted Answer

A partnership is a f

Question 9

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 10

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 11

The Sarbanes-Oxley Act of 2002 requires that CEOs personally certify the accuracy of financial reports.

Accepted Answer

A) True 
 B)False

Question 12

A normal rate of return refers to the ________ that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested.

Accepted Answer

A)  minimum amount 
B)  maximum amount 
C)  total amount 
D)  profit 
A)  minimum amount 
B)  maximum amount 
C)  total amount 
D)  profit

Question 13

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 accounting profit?

Accepted Answer

A)  $17,000 
B)  $22,000 
C)  $47,000 
D)  $64,000 
A)  $17,000 
B)  $22,000 
C)  $47,000 
D)  $64,000

Question 14

If you own a bond with a seven percent coupon rate and new bonds are paying five percent,what will happen to your bond's market price?

Accepted Answer

The answer of If you own a bond with a...

Question 15

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 16

Assume you set up a sole proprietorship and your lawyer tells you that as the owner,you could stand to lose your personal wealth if the business goes bankrupt.This means a sole proprietorship

Accepted Answer

A)  faces limited liability. 
B)  faces unlimited liability. 
C)  has little chance of succeeding. 
D)  is not a good type of business to set up. 
A)  faces limited liability. 
B)  faces unlimited liability. 
C)  has little chance of succeeding. 
D)  is not a good type of business to set up.

Question 17

An investor is more likely to buy a firm's stock if the firm's income statement shows ________ and if its balance sheet shows ________.

Accepted Answer

A)  a large net worth; a large price-earnings ratio 
B)  a large after-tax profit; a large net worth 
C)  a large price-earnings ratio; a large dividend yield 
D)  low opportunity costs; large liabilities 
A)  a large net worth; a large price-earnings ratio 
B)  a large after-tax profit; a large net worth 
C)  a large price-earnings ratio; a large dividend yield 
D)  low opportunity costs; large liabilities

Question 18

Payments by a corporation to its shareholders are known as

Accepted Answer

A)  stocks. 
B)  bonds. 
C)  coupons. 
D)  dividends. 
A)  stocks. 
B)  bonds. 
C)  coupons. 
D)  dividends.

Question 19

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 20

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.

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

Which is the least common type of business?

All of the following would be considered explicit costs of operating a business except

Which type of business is the most difficult to set up?

When groups of mortgages are bundled together by financial institutions and sold to investors,these institutions are said to be ________ mortgage loans.

A sole proprietorship is

Explain the relationships between a corporation's shareholders,its board of directors,and its top managers.

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

Define a partnership.

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

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

The Sarbanes-Oxley Act of 2002 requires that CEOs personally certify the accuracy of financial reports.

A normal rate of return refers to the ________ that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested.

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 accounting profit?

If you own a bond with a seven percent coupon rate and new bonds are paying five percent,what will happen to your bond's market price?

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 could stand to lose your personal wealth if the business goes bankrupt.This means a sole proprietorship

An investor is more likely to buy a firm's stock if the firm's income statement shows ________ and if its balance sheet shows ________.

Payments by a corporation to its shareholders are known as

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

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

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

An investor is more likely to buy a firm's stock if the firm's income statement shows and if its balance sheet shows .