Question 1

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 2

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

Accepted Answer

A) True 
 B)False

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

Which of the following takes place in the direct finance market?

Accepted Answer

A)  Firms borrow funds from banks. 
B)  Deposits from savers are accumulated and loans made to borrowers. 
C)  Ownership in corporations is sold in the form of preferred stock. 
D)  Banks offer savings accounts to customers. 
A)  Firms borrow funds from banks. 
B)  Deposits from savers are accumulated and loans made to borrowers. 
C)  Ownership in corporations is sold in the form of preferred stock. 
D)  Banks offer savings accounts to customers.

Question 5

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 6

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

Accepted Answer

A)  475/(1.6)3 
B)  475/(1.06)3 
C)  475 × 1.6 × 3 
D)  3.06/475 
A)  475/(1.6)3 
B)  475/(1.06)3 
C)  475 × 1.6 × 3 
D)  3.06/475

Question 7

Define a sole proprietorship.

Accepted Answer

A firm own

Question 8

Which of the following is operating income?

Accepted Answer

A)  explicit plus implicit costs 
B)  stockholders' equity 
C)  revenue minus operating expenses 
D)  net profit 
A)  explicit plus implicit costs 
B)  stockholders' equity 
C)  revenue minus operating expenses 
D)  net profit

Question 9

When Potbelly sold stock to the public in its IPO,it did so through the NASDAQ market.This was an example of Potbelly using ________ to raise funds.

Accepted Answer

A)  indirect finance 
B)  direct finance 
C)  bonds 
D)  corporate governance 
A)  indirect finance 
B)  direct finance 
C)  bonds 
D)  corporate governance

Question 10

How do the owners of a partnership relate to the business?

Accepted Answer

A)  The owners and the business are not separate legal entities. 
B)  The owners and the business are separate legal entities. 
C)  The assets of the owners are considered separate from the asset of the business. 
D)  None of these describe the legal relationship of the owners to the business. 
A)  The owners and the business are not separate legal entities. 
B)  The owners and the business are separate legal entities. 
C)  The assets of the owners are considered separate from the asset of the business. 
D)  None of these describe the legal relationship of the owners to the business.

Question 11

Who controls a partnership?

Accepted Answer

A)  the owners 
B)  stockholders 
C)  bondholders 
D)  employees 
A)  the owners 
B)  stockholders 
C)  bondholders 
D)  employees

Question 12

Traditionally,Wall Street investment banks had been organized as partnerships,but by 2000 they had converted to being publicly traded companies.As partnerships,the principal-agent problem is ________ because there is ________ separation of ownership from control.

Accepted Answer

A)  reduced; much 
B)  reduced; little 
C)  increased; much 
D)  increased; little 
A)  reduced; much 
B)  reduced; little 
C)  increased; much 
D)  increased; little

Question 13

The only type of business that faces limited liability is a corporation.

Accepted Answer

A) True 
 B)False

Question 14

A bond is a financial security that represents

Accepted Answer

A)  ownership in a corporation. 
B)  the portion of profits paid to shareholders. 
C)  the interest rate paid on a share of stock. 
D)  a promise to repay a fixed amount of funds. 
A)  ownership in a corporation. 
B)  the portion of profits paid to shareholders. 
C)  the interest rate paid on a share of stock. 
D)  a promise to repay a fixed amount of funds.

Question 15

How is accounting profit found?

Accepted Answer

Accounting profit eq

Question 16

How can a sole proprietorship raise funds needed for firm expansion?

Accepted Answer

By retaining earning

Question 17

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

Accepted Answer

A)  had more than doubled in price. 
B)  had declined by nearly 40 percent from the IPO price. 
C)  languished at the same $38 per share price. 
D)  had increased by almost 60 percent from the IPO price. 
A)  had more than doubled in price. 
B)  had declined by nearly 40 percent from the IPO price. 
C)  languished at the same $38 per share price. 
D)  had increased by almost 60 percent from the IPO price.

Question 18

If a corporate bond with a face value of $5,000 pays yearly coupon payments of $100,what is the coupon rate?

Accepted Answer

A)  2% 
B)  5% 
C)  10% 
D)  20% 
A)  2% 
B)  5% 
C)  10% 
D)  20%

Question 19

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 20

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.

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

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

Corporate governance involves the way in which

Which of the following takes place in the direct finance market?

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

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

Define a sole proprietorship.

Which of the following is operating income?

When Potbelly sold stock to the public in its IPO,it did so through the NASDAQ market.This was an example of Potbelly using ________ to raise funds.

How do the owners of a partnership relate to the business?

Who controls a partnership?

Traditionally,Wall Street investment banks had been organized as partnerships,but by 2000 they had converted to being publicly traded companies.As partnerships,the principal-agent problem is because there is separation of ownership from control.

The only type of business that faces limited liability is a corporation.

A bond is a financial security that represents

How is accounting profit found?

How can a sole proprietorship raise funds needed for firm expansion?

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

If a corporate bond with a face value of $5,000 pays yearly coupon payments of $100,what is the coupon rate?

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.

The owners of a ________ have a separate legal distinction from 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

Filters

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

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

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

Corporate governance involves the way in which

Which of the following takes place in the direct finance market?

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

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

Define a sole proprietorship.

Which of the following is operating income?

When Potbelly sold stock to the public in its IPO,it did so through the NASDAQ market.This was an example of Potbelly using ________ to raise funds.

How do the owners of a partnership relate to the business?

Who controls a partnership?

Traditionally,Wall Street investment banks had been organized as partnerships,but by 2000 they had converted to being publicly traded companies.As partnerships,the principal-agent problem is ________ because there is ________ separation of ownership from control.

The only type of business that faces limited liability is a corporation.

A bond is a financial security that represents

How is accounting profit found?

How can a sole proprietorship raise funds needed for firm expansion?

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

If a corporate bond with a face value of $5,000 pays yearly coupon payments of $100,what is the coupon rate?

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.

The owners of a ________ have a separate legal distinction from 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

Filters

Traditionally,Wall Street investment banks had been organized as partnerships,but by 2000 they had converted to being publicly traded companies.As partnerships,the principal-agent problem is because there is separation of ownership from control.