Question 1

Which type of business has the least government rules and regulations affecting it?

Accepted Answer

A) sole proprietorship 
B) partnership 
C) corporation 
D) They all have the same set of rules and regulations affecting them. 
A) sole proprietorship 
B) partnership 
C) corporation 
D) They all have the same set of rules and regulations affecting them.

Question 2

What is a corporate bond and what does it specify?

Accepted Answer

A bond is a promise to repay a

Question 3

With state and multistate lotteries,winners are typically given the choice between a lump sum payment today or a 20 year series of annuities.How should a winner decide which is better?

Accepted Answer

The winner should decide by de

Question 4

Opportunity costs are implicit costs.

Accepted Answer

A) True 
 B)False

Question 5

If you want to know the present value of a future payment received in one year,what formula can you use?

Accepted Answer

A) Present value equals future payment times the current market rate of interest. 
B) Present value equals future payment divided by one plus the rate of interest. 
C) Present value equals one plus the rate of interest in decimals divided by future payment. 
D) Present value equals future payments times one plus the rate of interest. 
A) Present value equals future payment times the current market rate of interest. 
B) Present value equals future payment divided by one plus the rate of interest. 
C) Present value equals one plus the rate of interest in decimals divided by future payment. 
D) Present value equals future payments times one plus the rate of interest.

Question 6

A higher bond price indicates a lower cost of new external funds.

Accepted Answer

A) True 
 B)False

Question 7

It is the role of ________ to transfer funds from savers to borrowers.

Accepted Answer

A) the Federal Reserve 
B) the federal government 
C) an economy's financial system 
D) corporate governance 
A) the Federal Reserve 
B) the federal government 
C) an economy's financial system 
D) corporate governance

Question 8

If you purchased a newly issued 30-year bond from Google with a face value of $3,000 and a coupon payment of 6 percent,Google would pay you

Accepted Answer

A) $100 per year for 30 years plus $3,000 at the end of the 30th year. 
B) $180 per year for 30 years. 
C) $180 per year for 30 years plus $3,000 at the end of the 30th year. 
D) $100 per year plus 6 percent per year for 30 years. 
A) $100 per year for 30 years plus $3,000 at the end of the 30th year. 
B) $180 per year for 30 years. 
C) $180 per year for 30 years plus $3,000 at the end of the 30th year. 
D) $100 per year plus 6 percent per year for 30 years.

Question 9

Why did the principal-agent problem for investment banks become more severe following the repeal of the Glass-Steagall Act in 1999?

Accepted Answer

Congress repealed the Glass-Steagall Act

Question 10

Explain the difference between a sole proprietorship and a partnership.

Accepted Answer

A sole proprietorship is a fir

Question 11

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

Accepted Answer

A) Produce the goods and services that consumers want at a lower cost than consumers themselves can produce. 
B) Organize the factors of production into a functioning,efficient unit. 
C) Have access to sufficient funds. 
D) Market firms today must do all of these things. 
A) Produce the goods and services that consumers want at a lower cost than consumers themselves can produce. 
B) Organize the factors of production into a functioning,efficient unit. 
C) Have access to sufficient funds. 
D) Market firms today must do all of these things.

Question 12

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

Accepted Answer

Ease of fo

Question 13

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a sole proprietorship.What is one advantage to Jeremy of setting up his business as a sole proprietorship?

Accepted Answer

A) As a sole proprietor,Jeremy would face limited liability. 
B) As a sole proprietor,Jeremy would have the ability to share risk with shareholders. 
C) As a sole proprietor,Jeremy would have both ownership and control over the business. 
D) All of the above would be advantages of setting up his business as a sole proprietorship. 
A) As a sole proprietor,Jeremy would face limited liability. 
B) As a sole proprietor,Jeremy would have the ability to share risk with shareholders. 
C) As a sole proprietor,Jeremy would have both ownership and control over the business. 
D) All of the above would be advantages of setting up his business as a sole proprietorship.

Question 14

Jack Dorsey is the Chief Executive Officer of Twitter as well as a member of Twitter's board of directors.Dorsey 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 15

What role do well-functioning financial markets play in a market economy?

Accepted Answer

They allocate saved

Question 16

If you own a $1,000 face value bond with one year remaining to maturity and a 7 percent coupon rate and new bonds are paying 11 percent,what is the most you can get for your old bond?

Accepted Answer

A) $1,028.85 
B) $1,000.00 
C) $963.96 
D) $952.30 
A) $1,028.85 
B) $1,000.00 
C) $963.96 
D) $952.30

Question 17

Bonds ________ and stocks ________.

Accepted Answer

A) have a fixed number of interest payments;have a fixed number of dividend payments 
B) have a fixed number of interest payments;may pay dividends forever 
C) may pay interest payments forever;have a fixed number of dividend payments 
D) always pay interest payments forever;always pay dividends forever 
A) have a fixed number of interest payments;have a fixed number of dividend payments 
B) have a fixed number of interest payments;may pay dividends forever 
C) may pay interest payments forever;have a fixed number of dividend payments 
D) always pay interest payments forever;always pay dividends forever

Question 18

Giorgio wants to build a new distribution warehouse for his sporting goods business and is going to issue new shares of stock to do so.This is an example of using ________ for his building project.

Accepted Answer

A) direct finance 
B) indirect finance 
C) retained earnings 
D) dividends 
A) direct finance 
B) indirect finance 
C) retained earnings 
D) dividends

Question 19

If a company pays a dividend of $5 to be received one year from now,dividends are expected to grow at a rate of 8 percent per year for the indefinite future,and the interest rate is 14 percent,the price of the company's stock should be ________ per share.

Accepted Answer

A) $8.00 
B) $83.33 
C) $227.27 
D) $610.00 
A) $8.00 
B) $83.33 
C) $227.27 
D) $610.00

Question 20

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What are the implicit costs of his business?

Accepted Answer

A) $8,000 
B) $18,000 
C) $24,000 
D) $32,000 
A) $8,000 
B) $18,000 
C) $24,000 
D) $32,000

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

Which type of business has the least government rules and regulations affecting it?

What is a corporate bond and what does it specify?

With state and multistate lotteries,winners are typically given the choice between a lump sum payment today or a 20 year series of annuities.How should a winner decide which is better?

Opportunity costs are implicit costs.

If you want to know the present value of a future payment received in one year,what formula can you use?

A higher bond price indicates a lower cost of new external funds.

It is the role of ________ to transfer funds from savers to borrowers.

If you purchased a newly issued 30-year bond from Google with a face value of $3,000 and a coupon payment of 6 percent,Google would pay you

Why did the principal-agent problem for investment banks become more severe following the repeal of the Glass-Steagall Act in 1999?

Explain the difference between a sole proprietorship and a partnership.

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

What are the advantages of setting up a proprietorship or partnership as opposed to a corporation?

Jeremy is thinking of starting up a small business selling NASCAR memorabilia.He is considering setting up his business as a sole proprietorship.What is one advantage to Jeremy of setting up his business as a sole proprietorship?

Jack Dorsey is the Chief Executive Officer of Twitter as well as a member of Twitter's board of directors.Dorsey is therefore classified as an

What role do well-functioning financial markets play in a market economy?

If you own a $1,000 face value bond with one year remaining to maturity and a 7 percent coupon rate and new bonds are paying 11 percent,what is the most you can get for your old bond?

Bonds ________ and stocks ________.

Giorgio wants to build a new distribution warehouse for his sporting goods business and is going to issue new shares of stock to do so.This is an example of using ________ for his building project.

If a company pays a dividend of $5 to be received one year from now,dividends are expected to grow at a rate of 8 percent per year for the indefinite future,and the interest rate is 14 percent,the price of the company's stock should be ________ per share.

Jake sells Star Wars memorabilia on eBay.His annual revenue is $42,000 per year,the explicit costs of his business are $10,000,and the opportunity costs of his business are $18,000 per year.What are the implicit costs of his business?

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

Bonds and stocks .