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

Generally with bond ratings,the ________ the rating,the higher the interest rate an investor will receive and the ________ the risk that the issuer of the bond will default.

The way in which a corporation is structured and the impact a corporation's structure has on the firm's behavior is referred to as

Of the types of business organizations in the United States,corporations account for ________ percentage of revenues and ________ percentage of profits.

The difference between a firm's assets and liabilities is its

In the United States,________ percent of all firms are sole proprietorships.

Included on the board of directors of Twitter are Peter Currie,president of Currie Capital LLC,the CEO of 1stdibs.com David Rosenblatt,and PureTech Health senior independent director Marjorie Scardino.These three board members do not have a direct management role with Twitter and are therefore referred to as

How do firms raise external funds through indirect finance?

In response to accounting scandals in 2002,the federal government passed legislation requiring that corporate directors have a certain level of expertise with financial information and mandating that chief executive officers personally certify the accuracy of financial statements.What is the name of this legislation?

What is economic profit?

Sylvia wants to expand her taxidermy business and is going to use profits from the business to do so.This is an example of using ________ for her expansion.

How does the owner of a corporation relate to the business?

What does it mean to say there is a separation of ownership from control in large corporations?

To reduce the principal-agent problem

Which of the following must a firm in a market economy do today to succeed?

What must balance on a balance sheet?

Pietro is a manager at a carwash.He has hired 10 workers to wash and detail cars for him and is considering what type of payment scheme he should set up for his workers.He can pay each of his workers $9 per hour to wash and detail cars,or he can pay his workers $12 for each car a worker washes and details.(It takes 75 minutes,on average,for an employee to wash and detail a car. )If Pietro wants to maximize the number of cars his workers wash and detail in one day,which payment scheme should he use? Explain.

The price of a financial asset should be equal to

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

All of the following are characteristics of a bond except

If a corporation retains all its profits and distributes none of the profit to owners,how can owners benefit?