Question 1

When Ferrari sells stock to the public in its IPO,it will do so through the New York Stock Exchange.People who buy the shares will

Accepted Answer

A) be promised to be repaid their investment plus interest. 
B) do so in the indirect finance market. 
C) own part of the company. 
D) All of the above are true. 
A) be promised to be repaid their investment plus interest. 
B) do so in the indirect finance market. 
C) own part of the company. 
D) All of the above are true.

Question 2

What is the present value of $777 in one year if the current rate of interest is 7 percent?

Accepted Answer

A) $831.39 
B) $726.17 
C) $457.06 
D) $111.00 
A) $831.39 
B) $726.17 
C) $457.06 
D) $111.00

Question 3

What is the present value of $960 in one year if the current rate of interest is 6 percent?

Accepted Answer

A) $676.76 
B) $905.66 
C) $1,017.60 
D) $1,449.46 
A) $676.76 
B) $905.66 
C) $1,017.60 
D) $1,449.46

Question 4

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

Accepted Answer

The firm's

Question 5

An increase in liabilities will reduce a firm's net worth.

Accepted Answer

A) True 
 B)False

Question 6

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 7

The longer you have to wait to receive a payment,

Accepted Answer

A) the greater value it will have to you. 
B) the less value it will have to you. 
C) the lower the interest rate you will charge on the payment. 
D) the more you are willing to discount the payment. 
A) the greater value it will have to you. 
B) the less value it will have to you. 
C) the lower the interest rate you will charge on the payment. 
D) the more you are willing to discount the payment.

Question 8

How is the separation of ownership from control related to the principal-agent problem?

Accepted Answer

The principal-agent problem results when

Question 9

A firm's managers need information on the firm's revenue and costs as well as information on the value of a firm's assets and the amount of the firm's debts to answer three basic questions.Which of the following is not one of those three basic questions?

Accepted Answer

A) what to produce? 
B) how to produce it? 
C) what price to charge? 
D) where to produce? 
A) what to produce? 
B) how to produce it? 
C) what price to charge? 
D) where to produce?

Question 10

Implicit costs are ________ and explicit costs are ________.

Accepted Answer

A) nonmonetary costs;also nonmonetary costs 
B) nonmonetary costs;costs that involve spending money 
C) costs that involve spending money;nonmonetary costs 
D) costs that involve spending money;also costs that involve spending money 
A) nonmonetary costs;also nonmonetary costs 
B) nonmonetary costs;costs that involve spending money 
C) costs that involve spending money;nonmonetary costs 
D) costs that involve spending money;also costs that involve spending money

Question 11

All of the following take place in the direct finance market except

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 12

From the highest percentage to the lowest percentage,the percentage of profits earned by businesses in the United States is represented by which of the following?

Accepted Answer

A) sole proprietorships,partnerships,corporations 
B) partnerships,corporations,sole proprietorships 
C) corporations,partnerships,sole proprietorships 
D) corporations,sole proprietorships,partnerships 
A) sole proprietorships,partnerships,corporations 
B) partnerships,corporations,sole proprietorships 
C) corporations,partnerships,sole proprietorships 
D) corporations,sole proprietorships,partnerships

Question 13

Humberto is the chief operational officer (COO)of the SodaSopa Company and currently serves on the board of directors of the Helium Company of America.Humberto is considered ________ of the Helium Company of America.

Accepted Answer

A) a managing director 
B) an inside director 
C) an unpaid advisor 
D) an outside director 
A) a managing director 
B) an inside director 
C) an unpaid advisor 
D) an outside director

Question 14

Why is money you receive at some future date worth less to you than money you receive today?

Accepted Answer

Money received at some future date is wo

Question 15

Who selects the board of directors of a corporation?

Accepted Answer

A) stockholders 
B) bondholders 
C) upper management 
D) all of the above 
A) stockholders 
B) bondholders 
C) upper management 
D) all of the above

Question 16

An income statement shows a firm's revenue,costs,and profit

Accepted Answer

A) for the firm's fiscal year. 
B) since the firm has been in operation. 
C) for a particular day. 
D) only if the firm is earning an accounting profit. 
A) for the firm's fiscal year. 
B) since the firm has been in operation. 
C) for a particular day. 
D) only if the firm is earning an accounting profit.

Question 17

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 18

Of the different types of businesses,a ________ has the most government rules and the most government regulations affecting it.

Accepted Answer

A) corporation 
B) partnership 
C) sole proprietorship 
D) All of the above are subject to the same amount of rules and regulations. 
A) corporation 
B) partnership 
C) sole proprietorship 
D) All of the above are subject to the same amount of rules and regulations.

Question 19

If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent,American Airlines would pay you

Accepted Answer

A) $33.33 per year for 30 years plus $1,000 at the end of the 30th year. 
B) $30 per year for 30 years. 
C) $30 per year for 30 years plus $1,000 at the end of the 30th year. 
D) $33.33 per year plus 3 percent per year for 30 years. 
A) $33.33 per year for 30 years plus $1,000 at the end of the 30th year. 
B) $30 per year for 30 years. 
C) $30 per year for 30 years plus $1,000 at the end of the 30th year. 
D) $33.33 per year plus 3 percent per year for 30 years.

Question 20

Which of the following would be considered an implicit cost of operating a business?

Accepted Answer

A) shipping expenses 
B) Social Security contributions for employees 
C) the resale value of delivery vans the company owns and uses for its deliveries 
D) interest payments on a loan 
A) shipping expenses 
B) Social Security contributions for employees 
C) the resale value of delivery vans the company owns and uses for its deliveries 
D) interest payments on a loan

When Ferrari sells stock to the public in its IPO,it will do so through the New York Stock Exchange.People who buy the shares will

What is the present value of $777 in one year if the current rate of interest is 7 percent?

What is the present value of $960 in one year if the current rate of interest is 6 percent?

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

An increase in liabilities will reduce a firm's net worth.

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

The longer you have to wait to receive a payment,

How is the separation of ownership from control related to the principal-agent problem?

A firm's managers need information on the firm's revenue and costs as well as information on the value of a firm's assets and the amount of the firm's debts to answer three basic questions.Which of the following is not one of those three basic questions?

Implicit costs are and explicit costs are .

All of the following take place in the direct finance market except

From the highest percentage to the lowest percentage,the percentage of profits earned by businesses in the United States is represented by which of the following?

Humberto is the chief operational officer (COO)of the SodaSopa Company and currently serves on the board of directors of the Helium Company of America.Humberto is considered ________ of the Helium Company of America.

Why is money you receive at some future date worth less to you than money you receive today?

Who selects the board of directors of a corporation?

An income statement shows a firm's revenue,costs,and profit

Subprime mortgages are

Of the different types of businesses,a ________ has the most government rules and the most government regulations affecting it.

If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent,American Airlines would pay you

Which of the following would be considered an implicit cost of operating a 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

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

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

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

When Ferrari sells stock to the public in its IPO,it will do so through the New York Stock Exchange.People who buy the shares will

What is the present value of $777 in one year if the current rate of interest is 7 percent?

What is the present value of $960 in one year if the current rate of interest is 6 percent?

If a partnership raised funds by recruiting additional owners to invest in the firm,what would happen to the firm's financial capital?

An increase in liabilities will reduce a firm's net worth.

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

The longer you have to wait to receive a payment,

How is the separation of ownership from control related to the principal-agent problem?

A firm's managers need information on the firm's revenue and costs as well as information on the value of a firm's assets and the amount of the firm's debts to answer three basic questions.Which of the following is not one of those three basic questions?

Implicit costs are ________ and explicit costs are ________.

All of the following take place in the direct finance market except

From the highest percentage to the lowest percentage,the percentage of profits earned by businesses in the United States is represented by which of the following?

Humberto is the chief operational officer (COO)of the SodaSopa Company and currently serves on the board of directors of the Helium Company of America.Humberto is considered ________ of the Helium Company of America.

Why is money you receive at some future date worth less to you than money you receive today?

Who selects the board of directors of a corporation?

An income statement shows a firm's revenue,costs,and profit

Subprime mortgages are

Of the different types of businesses,a ________ has the most government rules and the most government regulations affecting it.

If you purchased a newly issued 30-year bond from American Airlines with a face value of $1,000 and a coupon payment of 3 percent,American Airlines would pay you

Which of the following would be considered an implicit cost of operating a 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

The Economics of Health Care

Comparative Advantage and the Gains From International Trade

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

Implicit costs are and explicit costs are .