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

With respect to the financial crisis of 2007-2009,some economists argue that financial service firms should have done a better job of assessing the risk involved in investing in mortgage-backed securities.Better governance in this context refers to which of the following?

Describe the three main categories of firms.

A firm in a market economy must do all of the following to succeed except

What is the difference between retained earnings and dividends?

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

Alt-A mortgages are

The principal-agent problem is

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

The longer you have to wait to receive a payment

Which of the following is operating income?

Define a sole proprietorship.

Dividing the dividend payment by the stock's ________ determines the dividend yield.

What takes place in the indirect finance market?

You have a bond that pays $18 per year in coupon payments.Which of the following would result in a decrease in the price of your bond?

Veruca sells therapeutic bath salts on the Internet.Her annual revenue is $52,000 per year,the explicit costs of her business are $14,000,and the opportunity costs of her business are $17,000 per year.What is her economic profit?

Which of the following is true?

What is an income statement?

Direct finance refers to the flow of funds from savers to borrowers through financial markets.

A firm's accounting profit is measured as

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