Question 1

A bond's coupon payment divided by the bond's ________ is equal to the bond's current yield.

Accepted Answer

A) face value 
B) current price 
C) principal 
D) interest rate 
A) face value 
B) current price 
C) principal 
D) interest rate

Question 2

If a firm raises funds by recruiting additional owners to invest in the firm

Accepted Answer

A) the firm's financial capital would increase. 
B) the firm's financial capital would decrease. 
C) the firm's stock price would decrease. 
D) the firm's net worth would decrease. 
A) the firm's financial capital would increase. 
B) the firm's financial capital would decrease. 
C) the firm's stock price would decrease. 
D) the firm's net worth would decrease.

Question 3

Anything of value owned 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 4

Satya Nadella is the Chief Executive Officer of Microsoft as well as a member of Microsoft's board of directors.Nadella is therefore classified as an

Accepted Answer

A) inside director. 
B) outside director. 
C) independent director. 
D) unbiased director. 
A) inside director. 
B) outside director. 
C) independent director. 
D) unbiased director.

Question 5

Which of the following is an advantage of starting a new business as a partnership?

Accepted Answer

A) The owners have limited personal liability. 
B) A partnership has few government rules and regulations to comply with. 
C) Business profits are not taxed. 
D) A partnership can easily attain additional funding. 
A) The owners have limited personal liability. 
B) A partnership has few government rules and regulations to comply with. 
C) Business profits are not taxed. 
D) A partnership can easily attain additional funding.

Question 6

In a corporation,what are "inside directors" and "outside directors"?

Accepted Answer

Inside directors are members of manageme

Question 7

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 assets 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 assets of the business. 
D) None of these describe the legal relationship of the owner to the business.

Question 8

Subprime mortgages are

Accepted Answer

A) mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages. 
B) mortgages which are bundled together by financial institutions and sold to investors. 
C) mortgages issued to borrowers with flawed credit histories. 
D) government-backed mortgages issued by Fannie Mae and Freddie Mac. 
A) mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages. 
B) mortgages which are bundled together by financial institutions and sold to investors. 
C) mortgages issued to borrowers with flawed credit histories. 
D) government-backed mortgages issued by Fannie Mae and Freddie Mac.

Question 9

A bond's coupon payment divided by the bond's current price is equal to the bond's

Accepted Answer

A) dividend yield. 
B) current yield. 
C) price-earnings ratio. 
D) maturity value. 
A) dividend yield. 
B) current yield. 
C) price-earnings ratio. 
D) maturity value.

Question 10

A nonmonetary opportunity cost is called a(n)________,while a cost that involves spending money is called a(n)________.

Accepted Answer

A) accounting cost;explicit cost 
B) implicit cost;explicit cost 
C) accounting profit;economic profit 
D) normal rate of return;asset 
A) accounting cost;explicit cost 
B) implicit cost;explicit cost 
C) accounting profit;economic profit 
D) normal rate of return;asset

Question 11

When a business is set up as a partnership,the owners of the business face limited liability.

Accepted Answer

A) True 
 B)False

Question 12

A member of a corporate board of directors that does not have a direct management role in the firm is known as

Accepted Answer

A) a shareholder. 
B) an inside director. 
C) an outside director. 
D) a corporate governor. 
A) a shareholder. 
B) an inside director. 
C) an outside director. 
D) a corporate governor.

Question 13

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 14

Which of the following does not take place in the direct finance market?

Accepted Answer

A) Ownership in corporations is sold in the form of common stock. 
B) Deposits from savers are accumulated and loans made to borrowers. 
C) Ownership in corporations is sold in the form of preferred stock. 
D) Corporate bonds are sold to savers. 
A) Ownership in corporations is sold in the form of common stock. 
B) Deposits from savers are accumulated and loans made to borrowers. 
C) Ownership in corporations is sold in the form of preferred stock. 
D) Corporate bonds are sold to savers.

Question 15

The value you give today to money you will receive in the future is called the future payment's

Accepted Answer

A) time-sensitive value. 
B) future value. 
C) present value. 
D) historical value. 
A) time-sensitive value. 
B) future value. 
C) present value. 
D) historical value.

Question 16

Indirect finance includes the sale by a corporation of stocks or bonds,as well as borrowing money from a bank.

Accepted Answer

A) True 
 B)False

Question 17

A partnership is limited to how many owners?

Accepted Answer

A) 2 
B) 5 
C) less than 10 
D) There is no limit to the number of owners. 
A) 2 
B) 5 
C) less than 10 
D) There is no limit to the number of owners.

Question 18

A corporation is the type of business that 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 19

When the coupon rate on newly issued bonds decreases relative to older,outstanding bonds,what happens?

Accepted Answer

A) The market price of the older bond falls in the secondary market. 
B) The market price of the older bond rises in the secondary market. 
C) Older bonds can still be sold at their face value. 
D) Older bonds will sell for more than their face value. 
A) The market price of the older bond falls in the secondary market. 
B) The market price of the older bond rises in the secondary market. 
C) Older bonds can still be sold at their face value. 
D) Older bonds will sell for more than their face value.

Question 20

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.

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

A bond's coupon payment divided by the bond's ________ is equal to the bond's current yield.

If a firm raises funds by recruiting additional owners to invest in the firm

Anything of value owned by a person or a firm is

Satya Nadella is the Chief Executive Officer of Microsoft as well as a member of Microsoft's board of directors.Nadella is therefore classified as an

Which of the following is an advantage of starting a new business as a partnership?

In a corporation,what are "inside directors" and "outside directors"?

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

Subprime mortgages are

A bond's coupon payment divided by the bond's current price is equal to the bond's

A nonmonetary opportunity cost is called a(n)________,while a cost that involves spending money is called a(n)________.

When a business is set up as a partnership,the owners of the business face limited liability.

A member of a corporate board of directors that does not have a direct management role in the firm is known as

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

Which of the following does not take place in the direct finance market?

The value you give today to money you will receive in the future is called the future payment's

Indirect finance includes the sale by a corporation of stocks or bonds,as well as borrowing money from a bank.

A partnership is limited to how many owners?

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

When the coupon rate on newly issued bonds decreases relative to older,outstanding bonds,what happens?

A sole proprietorship is

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

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A nonmonetary opportunity cost is called a(n),while a cost that involves spending money is called a(n).