Question 1

If a corporation goes bankrupt,which of the following has first claim on the firm's assets?

Accepted Answer

A)  stockholders 
B)  the state where chartered 
C)  employees 
D)  bondholders 
A)  stockholders 
B)  the state where chartered 
C)  employees 
D)  bondholders

Question 2

How can a proprietorship or partnership raise funds for expansion?

Accepted Answer

A)  borrow from someone or an institution willing to lend the funds 
B)  reinvest profit back into the business 
C)  take on a partner or more partners 
D)  Any of these would generate funds for expansion. 
A)  borrow from someone or an institution willing to lend the funds 
B)  reinvest profit back into the business 
C)  take on a partner or more partners 
D)  Any of these would generate funds for expansion.

Question 3

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

Question 4

A decrease in liabilities will reduce a firm's net worth.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

How is economic profit found?

Accepted Answer

Economic profits equ

Question 7

Scott is a manager at a pool cleaning business.He has hired 10 workers to clean pools for him and is considering what type of payment scheme he should set up for his workers.He can pay each of his workers $10 per hour to clean pools,or he can pay his workers $20 for each pool a worker cleans.(It takes 2 hours,on average,for an employee to clean a pool thoroughly.)If Scott wants to maximize the number of pools his workers clean in one day,which payment scheme should he use? Explain.

Accepted Answer

If Scott wants to maximize the number of

Question 8

The minimum amount that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested,is referred to as

Accepted Answer

A)  the explicit costs of production. 
B)  net worth. 
C)  net income. 
D)  a normal rate of return. 
A)  the explicit costs of production. 
B)  net worth. 
C)  net income. 
D)  a normal rate of return.

Question 9

Organizing a successful firm in a market economy has become ________ over the last century.

Accepted Answer

A)  legally impossible 
B)  politically impossible 
C)  less difficult 
D)  more difficult 
A)  legally impossible 
B)  politically impossible 
C)  less difficult 
D)  more difficult

Question 10

One result of the financial meltdown of the late 2000s was that mortgage institutions ________ and ________ were brought under direct control of the government.

Accepted Answer

A)  Fannie Mae; Freddie Mac 
B)  Glass Steagall; Sarbanes Oxley 
C)  Goldman Sachs; Morgan Stanley 
D)  Lehman Brothers; FDIC 
A)  Fannie Mae; Freddie Mac 
B)  Glass Steagall; Sarbanes Oxley 
C)  Goldman Sachs; Morgan Stanley 
D)  Lehman Brothers; FDIC

Question 11

Which of the following is a characteristic of a bond?

Accepted Answer

A)  A bond 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)  All of these are characteristic of bonds. 
A)  A bond 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)  All of these are characteristic of bonds.

Question 12

What is the present value of $575 in a one year if the current rate of interest is 4 percent?

Accepted Answer

A)  $410.71 
B)  $552.88 
C)  $598 
D)  $805 
A)  $410.71 
B)  $552.88 
C)  $598 
D)  $805

Question 13

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 14

In 2011,the dividend yield on Microsoft (MSFT)stock rose from 1.97% to 3.10%.Which of the following would have generated that result?

Accepted Answer

A)  The closing price of Microsoft stock rose. 
B)  Microsoft announced an increase in the dividend it would pay per share. 
C)  The price-earnings ratio rose. 
D)  Microsoft issued bonds with a coupon rate equal to 3.10%. 
A)  The closing price of Microsoft stock rose. 
B)  Microsoft announced an increase in the dividend it would pay per share. 
C)  The price-earnings ratio rose. 
D)  Microsoft issued bonds with a coupon rate equal to 3.10%.

Question 15

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What are the implicit costs of his business?

Accepted Answer

A)  $8,000 
B)  $18,000 
C)  $24,000 
D)  $32,000 
A)  $8,000 
B)  $18,000 
C)  $24,000 
D)  $32,000

Question 16

What are earnings per share equal to?

Accepted Answer

A)  the last dividend payment made 
B)  total dividend payments plus retained earnings divided by outstanding stock shares 
C)  the amount by which the stock's market price has increased in the last year 
D)  revenues divided by the number of stockholders 
A)  the last dividend payment made 
B)  total dividend payments plus retained earnings divided by outstanding stock shares 
C)  the amount by which the stock's market price has increased in the last year 
D)  revenues divided by the number of stockholders

Question 17

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 18

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 19

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 20

If you put $100 into a bank account that earns five percent interest per year,what is the formula you should use to determine the account's future value in one year?

Accepted Answer

A)  Future value equals the present value divided by the rate of interest. 
B)  Future value equals the present value multiplied by the rate of interest. 
C)  Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D)  All of these yield the same answer. 
A)  Future value equals the present value divided by the rate of interest. 
B)  Future value equals the present value multiplied by the rate of interest. 
C)  Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D)  All of these yield the same answer.

If a corporation goes bankrupt,which of the following has first claim on the firm's assets?

How can a proprietorship or partnership raise funds for expansion?

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%?

A decrease in liabilities will reduce a firm's net worth.

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

How is economic profit found?

The minimum amount that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested,is referred to as

Organizing a successful firm in a market economy has become ________ over the last century.

One result of the financial meltdown of the late 2000s was that mortgage institutions and were brought under direct control of the government.

Which of the following is a characteristic of a bond?

What is the present value of $575 in a one year if the current rate of interest is 4 percent?

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?

In 2011,the dividend yield on Microsoft (MSFT)stock rose from 1.97% to 3.10%.Which of the following would have generated that result?

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What are the implicit costs of his business?

What are earnings per share equal to?

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

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

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

If you put $100 into a bank account that earns five percent interest per year,what is the formula you should use to determine the account's future value in one year?

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

If a corporation goes bankrupt,which of the following has first claim on the firm's assets?

How can a proprietorship or partnership raise funds for expansion?

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%?

A decrease in liabilities will reduce a firm's net worth.

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

How is economic profit found?

The minimum amount that investors must earn on the funds they invest in a firm,expressed as a percentage of the amount invested,is referred to as

Organizing a successful firm in a market economy has become ________ over the last century.

One result of the financial meltdown of the late 2000s was that mortgage institutions ________ and ________ were brought under direct control of the government.

Which of the following is a characteristic of a bond?

What is the present value of $575 in a one year if the current rate of interest is 4 percent?

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?

In 2011,the dividend yield on Microsoft (MSFT)stock rose from 1.97% to 3.10%.Which of the following would have generated that result?

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What are the implicit costs of his business?

What are earnings per share equal to?

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

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

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

If you put $100 into a bank account that earns five percent interest per year,what is the formula you should use to determine the account's future value in one year?

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

One result of the financial meltdown of the late 2000s was that mortgage institutions and were brought under direct control of the government.