Question 1

Stockholders

Accepted Answer

A) are liable for the debts of a corporation. 
B) are the owners of a corporation. 
C) control a corporation's day-to-day activities. 
D) hire the managers of a corporation. 
A) are liable for the debts of a corporation. 
B) are the owners of a corporation. 
C) control a corporation's day-to-day activities. 
D) hire the managers of a corporation.

Question 2

Stockholders are the owners of which type of business?

Accepted Answer

A) sole proprietorships 
B) partnerships 
C) corporations 
D) all of the above 
A) sole proprietorships 
B) partnerships 
C) corporations 
D) all of the above

Question 3

An asset is

Accepted Answer

A) anything of value owned by a person or a firm. 
B) a payment by a corporation to its shareholders. 
C) a nonmonetary opportunity cost. 
D) anything owed by a person or a firm. 
A) anything of value owned by a person or a firm. 
B) a payment by a corporation to its shareholders. 
C) a nonmonetary opportunity cost. 
D) anything owed by a person or a firm.

Question 4

Before its IPO,Twitter was an example of a private firm.As a private firm,Twitter was

Accepted Answer

A) not subject to government regulations and taxation. 
B) run by stockholders and a board of directors. 
C) run by its founders,Evan Williams,Noah Glass,Jack Dorsey,and Biz Stone. 
D) not legally allowed to raise funds through venture capital firms. 
A) not subject to government regulations and taxation. 
B) run by stockholders and a board of directors. 
C) run by its founders,Evan Williams,Noah Glass,Jack Dorsey,and Biz Stone. 
D) not legally allowed to raise funds through venture capital firms.

Question 5

The typical firm in many industries has become ________ over the past 100 years,and efficiently organizing production has become ________.

Accepted Answer

A) larger;more difficult 
B) smaller;more difficult 
C) larger;easier 
D) smaller;easier 
A) larger;more difficult 
B) smaller;more difficult 
C) larger;easier 
D) smaller;easier

Question 6

What is the difference between explicit and implicit costs?

Accepted Answer

Explicit costs are out-of-pock

Question 7

What is the central role of financial intermediaries in a market economy?

Accepted Answer

A) the creation and printing of money 
B) keeping the price level stable 
C) bringing together savers and borrowers 
D) providing safe deposit boxes for people and businesses 
A) the creation and printing of money 
B) keeping the price level stable 
C) bringing together savers and borrowers 
D) providing safe deposit boxes for people and businesses

Question 8

Owners of a corporation share in the profits of the firm

Accepted Answer

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

Question 9

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 10

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 11

In the United States,corporate profits are taxed at the corporate level but are not taxed as personal income in the form of dividend payments.

Accepted Answer

A) True 
 B)False

Question 12

What is the present value of $960 in one year if the current rate of interest is 6 percent?

Accepted Answer

A) $676.76 
B) $905.66 
C) $1,017.60 
D) $1,449.46 
A) $676.76 
B) $905.66 
C) $1,017.60 
D) $1,449.46

Question 13

In response to accounting scandals in 2002,the federal government passed legislation requiring among other things that auditors disclose any potential conflicts of interest.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 14

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 15

A proprietorship or partnership can raise funds for expansion in all of the following ways except

Accepted Answer

A) borrowing from someone or an institution willing to lend the funds. 
B) reinvesting profit back into the business. 
C) taking on a partner or more partners. 
D) issuing stock through financial markets. 
A) borrowing from someone or an institution willing to lend the funds. 
B) reinvesting profit back into the business. 
C) taking on a partner or more partners. 
D) issuing stock through financial markets.

Question 16

The Sarbanes-Oxley Act of 2002

Accepted Answer

A) created the Consumer Financial Protection Bureau to be housed in the Federal Reserve. 
B) mandates that firms raise funds for expansion only through the sale of stock or from bank loans,but not from the sale of corporate bonds. 
C) requires that CEO's personally certify the accuracy of financial statements. 
D) established the Financial Stability Oversight Council to identify risks to the financial system. 
A) created the Consumer Financial Protection Bureau to be housed in the Federal Reserve. 
B) mandates that firms raise funds for expansion only through the sale of stock or from bank loans,but not from the sale of corporate bonds. 
C) requires that CEO's personally certify the accuracy of financial statements. 
D) established the Financial Stability Oversight Council to identify risks to the financial system.

Question 17

Which of the following is the most important of the over-the-counter markets?

Accepted Answer

A) New York Stock Exchange 
B) the S&P 500 
C) the NASDAQ 
D) the Chicago Mercantile Exchange 
A) New York Stock Exchange 
B) the S&P 500 
C) the NASDAQ 
D) the Chicago Mercantile Exchange

Question 18

On a balance sheet

Accepted Answer

A) total assets must equal total liabilities plus equity. 
B) total assets plus equity must equal total liabilities. 
C) total assets plus total liabilities must equal zero. 
D) total assets plus total liabilities plus equity must equal zero. 
A) total assets must equal total liabilities plus equity. 
B) total assets plus equity must equal total liabilities. 
C) total assets plus total liabilities must equal zero. 
D) total assets plus total liabilities plus equity must equal zero.

Question 19

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 20

Most app developers have adopted the business model of

Accepted Answer

A) charging a small fee for their apps to be downloaded. 
B) allowing their apps to be downloaded and used for free,while trying to still earn money from users. 
C) charging a between $1.99 and $2.99 for their apps to be downloaded. 
D) allowing their apps to be downloaded to one device for free,but charging a high price for the apps to be downloaded to additional devices. 
A) charging a small fee for their apps to be downloaded. 
B) allowing their apps to be downloaded and used for free,while trying to still earn money from users. 
C) charging a between $1.99 and $2.99 for their apps to be downloaded. 
D) allowing their apps to be downloaded to one device for free,but charging a high price for the apps to be downloaded to additional devices.

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

Stockholders

Stockholders are the owners of which type of business?

An asset is

Before its IPO,Twitter was an example of a private firm.As a private firm,Twitter was

The typical firm in many industries has become ________ over the past 100 years,and efficiently organizing production has become ________.

What is the difference between explicit and implicit costs?

What is the central role of financial intermediaries in a market economy?

Owners of a corporation share in the profits of the firm

How can a proprietorship or partnership raise funds for expansion?

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

In the United States,corporate profits are taxed at the corporate level but are not taxed as personal income in the form of dividend payments.

What is the present value of $960 in one year if the current rate of interest is 6 percent?

In response to accounting scandals in 2002,the federal government passed legislation requiring among other things that auditors disclose any potential conflicts of interest.What is the name of this legislation?

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

A proprietorship or partnership can raise funds for expansion in all of the following ways except

The Sarbanes-Oxley Act of 2002

Which of the following is the most important of the over-the-counter markets?

On a balance sheet

Corporate governance involves the way in which

Most app developers have adopted the business model of

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

The typical firm in many industries has become over the past 100 years,and efficiently organizing production has become .