Exam 6: Firms, the Stock Market, and Corporate Governance

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?

Who operates and controls a corporation in its day-to-day activities?

What do the highest stock price and the lowest stock price over the previous year indicate?

What happens in the secondary market?

Assume you set up a sole proprietorship and your lawyer tells you that as the owner,you could stand to lose your personal wealth if the business goes bankrupt.This means a sole proprietorship

Which of the following would explain why accounting profit might be greater than economic profit?

What are liabilities?

How can a proprietorship or partnership raise funds for expansion?

The profits a corporation keeps to finance future expansion are known as

When Internet coupon site Groupon sold stock to the public for the first time,funds were being raised in a ________ market,and when those newly issued shares are resold to other buyers,the sales take place in a ________ market.

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

One of the most widely followed stock indexes in the United States is the Dow Jones Industrial Average.This index represents

Dividing the dividend payment by the stock's closing market price determines the

Briefly describe the Sarbanes-Oxley Act and explain why it was passed.

Corporate governance involves the way in which

The Sarbanes-Oxley Act of 2002 requires that CEOs personally certify the accuracy of financial reports.

The owners of a ________ have a separate legal distinction from the business.

When groups of mortgages are bundled together by financial institutions and sold to investors,these institutions are said to be ________ mortgage loans.

In August 2011,Standard & Poor's (S&P)changed its rating on U.S.Treasury bonds from ________ based on the state of the federal government's budget deficit.

In the United States,corporate profits are taxed at the corporate level and then are taxed again as personal income in the form of dividend payments.