Question 1

A bond is a financial security that represents a promise to repay

Accepted Answer

A) a yearly interest payment only. 
B) a yearly principal payment only. 
C) a yearly interest payment and a principal payment. 
D) Bonds are investments that do not promise any kind of repayment. 
A) a yearly interest payment only. 
B) a yearly principal payment only. 
C) a yearly interest payment and a principal payment. 
D) Bonds are investments that do not promise any kind of repayment.

Question 2

Briefly describe the three most widely followed stock indexes in the United States.

Accepted Answer

1.The Dow Jones Industrial Average,which

Question 3

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 4

Indirect finance refers to the flow of funds from savers to borrowers through financial intermediaries.

Accepted Answer

A) True 
 B)False

Question 5

Define a partnership.

Accepted Answer

A partnership is a f

Question 6

Implicit costs are ________ and explicit costs are ________.

Accepted Answer

A) nonmonetary costs;also nonmonetary costs 
B) nonmonetary costs;costs that involve spending money 
C) costs that involve spending money;nonmonetary costs 
D) costs that involve spending money;also costs that involve spending money 
A) nonmonetary costs;also nonmonetary costs 
B) nonmonetary costs;costs that involve spending money 
C) costs that involve spending money;nonmonetary costs 
D) costs that involve spending money;also costs that involve spending money

Question 7

If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40,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 8

Public companies ________ and private companies ________.

Accepted Answer

A) sell stock in financial markets;also sell stock in financial markets 
B) sell stock in financial markets;do not sell stock in financial markets 
C) do not sell stock in financial markets;also do not sell stock in financial markets 
D) do not sell stock in financial markets;sell stock in financial markets 
A) sell stock in financial markets;also sell stock in financial markets 
B) sell stock in financial markets;do not sell stock in financial markets 
C) do not sell stock in financial markets;also do not sell stock in financial markets 
D) do not sell stock in financial markets;sell stock in financial markets

Question 9

In a public corporation,asymmetric information often results in a principal-agent problem between top management and ownership.What information would help to prevent this principal-agent problem?

Accepted Answer

Top managers know more about how the com

Question 10

Anything owed by a person or a firm is

Accepted Answer

A) an asset. 
B) a liability. 
C) a bond. 
D) equity. 
A) an asset. 
B) a liability. 
C) a bond. 
D) equity.

Question 11

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 12

What is the formula you should use to determine a bank account's future value in one year?

Accepted Answer

A) Future value equals the present value plus the rate of interest. 
B) Future value equals the present value minus the rate of interest. 
C) Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D) Future value equals the present value divided by one plus the rate of interest in decimals. 
A) Future value equals the present value plus the rate of interest. 
B) Future value equals the present value minus the rate of interest. 
C) Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D) Future value equals the present value divided by one plus the rate of interest in decimals.

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 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 14

Explain the relationship between the interest rate on a bond and the default risk on a bond.

Accepted Answer

With bonds,the higher the defa

Question 15

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She is considering setting up her business as a corporation.What is one advantage to Torrie of setting up her business as a corporation?

Accepted Answer

A) By setting up the business as a corporation,Torrie would not face double taxation. 
B) By setting up the business as a corporation,Torrie would have the ability to share risk with shareholders. 
C) By setting up the business as a corporation,Torrie would have both ownership and control over the business. 
D) All of the above would be advantages of setting up her business as a corporation. 
A) By setting up the business as a corporation,Torrie would not face double taxation. 
B) By setting up the business as a corporation,Torrie would have the ability to share risk with shareholders. 
C) By setting up the business as a corporation,Torrie would have both ownership and control over the business. 
D) All of the above would be advantages of setting up her business as a corporation.

Question 16

The shareholders of a corporation

Accepted Answer

A) are inside directors of the corporation. 
B) are only comprised of top management for a large corporation. 
C) directly manage the corporation. 
D) elect a board of directors to represent their interests. 
A) are inside directors of the corporation. 
B) are only comprised of top management for a large corporation. 
C) directly manage the corporation. 
D) elect a board of directors to represent their interests.

Question 17

Who is the seller in a primary market and who is the seller in a secondary market?

Accepted Answer

The corporation issuing a bond

Question 18

Anything owed by a person or a firm is

Accepted Answer

A) an asset. 
B) a liability. 
C) wealth. 
D) owner's yield. 
A) an asset. 
B) a liability. 
C) wealth. 
D) owner's yield.

Question 19

________ of people work at firms that have 50 or more employees.

Accepted Answer

A) Less than 25 percent 
B) About 50 percent 
C) More than 75 percent 
D) Close to 97 percent 
A) Less than 25 percent 
B) About 50 percent 
C) More than 75 percent 
D) Close to 97 percent

Question 20

In a typical year,________ new firms open in the United States.

Accepted Answer

A) more than 400,000 
B) more than 1 million 
C) less than 200,000 
D) approximately 125,000 
A) more than 400,000 
B) more than 1 million 
C) less than 200,000 
D) approximately 125,000

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

A bond is a financial security that represents a promise to repay

Briefly describe the three most widely followed stock indexes in the United States.

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

Indirect finance refers to the flow of funds from savers to borrowers through financial intermediaries.

Define a partnership.

Implicit costs are ________ and explicit costs are ________.

If a corporate bond with a face value of $1,000 pays yearly coupon payments of $40,what is the coupon rate?

Public companies ________ and private companies ________.

In a public corporation,asymmetric information often results in a principal-agent problem between top management and ownership.What information would help to prevent this principal-agent problem?

Anything owed by a person or a firm is

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

What is the formula you should use to determine a bank account's future value in one year?

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?

Explain the relationship between the interest rate on a bond and the default risk on a bond.

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She is considering setting up her business as a corporation.What is one advantage to Torrie of setting up her business as a corporation?

The shareholders of a corporation

Who is the seller in a primary market and who is the seller in a secondary market?

Anything owed by a person or a firm is

________ of people work at firms that have 50 or more employees.

In a typical year,________ new firms open in the United States.

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

Implicit costs are and explicit costs are .

Public companies and private companies .