Question 1

A firm's accounting profit is measured as

Accepted Answer

A) revenue plus operating expenses minus taxes paid. 
B) operating expenses minus revenue. 
C) revenue minus operating expenses and taxes paid. 
D) net worth minus economic profit. 
A) revenue plus operating expenses minus taxes paid. 
B) operating expenses minus revenue. 
C) revenue minus operating expenses and taxes paid. 
D) net worth minus economic profit.

Question 2

A corporation is limited to how many owners?

Accepted Answer

A) 1 
B) 2 
C) less than 10 
D) There is no limit to the number of owners. 
A) 1 
B) 2 
C) less than 10 
D) There is no limit to the number of owners.

Question 3

If a corporate bond with face value of $8,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

Accepted Answer

A) $320 
B) $2,000 
C) $8,000 
D) $9,600 
A) $320 
B) $2,000 
C) $8,000 
D) $9,600

Question 4

The ability to share work and share risk is an advantage for

Accepted Answer

A) sole proprietorships and partnerships. 
B) sole proprietorships. 
C) sole proprietorships and corporations. 
D) partnerships. 
A) sole proprietorships and partnerships. 
B) sole proprietorships. 
C) sole proprietorships and corporations. 
D) partnerships.

Question 5

Describe the three main categories of firms.

Accepted Answer

The three main types of firms are sole p

Question 6

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,what is the coupon rate?

Accepted Answer

A) 2.5% 
B) 4% 
C) 25% 
D) 40% 
A) 2.5% 
B) 4% 
C) 25% 
D) 40%

Question 7

If the final expressions in a present value equation used to calculate the price of a bond you are considering buying are "[$50 / (1 + .08)3] + [$500 / (1 + .08)3]",which of the following is correct?

Accepted Answer

A) The face value is $500,the coupon is $50,and the coupon will mature in 3 years. 
B) The face value is $50,the interest rate you need is 8 percent,and the coupon will mature in 3 years. 
C) The face value is $500,the interest rate you need is 3 percent,and the coupon will mature in 8 years. 
D) The coupon is $50,the interest rate you need is 1.08 percent,and the coupon will mature in 3 years. 
A) The face value is $500,the coupon is $50,and the coupon will mature in 3 years. 
B) The face value is $50,the interest rate you need is 8 percent,and the coupon will mature in 3 years. 
C) The face value is $500,the interest rate you need is 3 percent,and the coupon will mature in 8 years. 
D) The coupon is $50,the interest rate you need is 1.08 percent,and the coupon will mature in 3 years.

Question 8

A financial statement that sums up a firm's financial position on a particular day is

Accepted Answer

A) a balance sheet. 
B) an income statement. 
C) statement of cash flow. 
D) an equity report. 
A) a balance sheet. 
B) an income statement. 
C) statement of cash flow. 
D) an equity report.

Question 9

Javier wants to start a microbrewery business and is thinking of setting it up as a sole proprietorship.What are the advantages and disadvantages he will face by setting up the business as a sole proprietorship as opposed to a partnership or a corporation?

Accepted Answer

As a sole proprietorship,Javier has the

Question 10

Opportunity costs are implicit costs.

Accepted Answer

A) True 
 B)False

Question 11

The decline in starting new businesses

Accepted Answer

A) is not concentrated in one geographic area. 
B) is concentrated in the Northeast states. 
C) is concentrated in the Gulf Coast states. 
D) is concentrated in the Rust Belt. 
A) is not concentrated in one geographic area. 
B) is concentrated in the Northeast states. 
C) is concentrated in the Gulf Coast states. 
D) is concentrated in the Rust Belt.

Question 12

In many corporations,the managers of the corporation run the corporation,although the shareholders own the corporation.In this situation,

Accepted Answer

A) there are no inside directors on the board of directors. 
B) there is separation of ownership from control. 
C) there are no outside directors on the board of directors. 
D) there is no corporate governance. 
A) there are no inside directors on the board of directors. 
B) there is separation of ownership from control. 
C) there are no outside directors on the board of directors. 
D) there is no corporate governance.

Question 13

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time ________that member's independence from the company's CEO.If this is true,it would tend to ________ the principal-agent problem.

Accepted Answer

A) enhances;increase 
B) diminishes;increase 
C) has no impact on;increase 
D) diminishes;decrease 
A) enhances;increase 
B) diminishes;increase 
C) has no impact on;increase 
D) diminishes;decrease

Question 14

Limited personal liability is an advantage for

Accepted Answer

A) sole proprietorships and partnerships. 
B) partnerships and corporations. 
C) sole proprietorships and corporations 
D) corporations. 
A) sole proprietorships and partnerships. 
B) partnerships and corporations. 
C) sole proprietorships and corporations 
D) corporations.

Question 15

Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs.The company earns $1.4 million in revenues and has $3.7 million in net worth.Based on this information,what is the economic profit for Harry's Hookas?

Accepted Answer

A) $200,000 
B) $700,000 
C) $900,000 
D) $1.1 million 
A) $200,000 
B) $700,000 
C) $900,000 
D) $1.1 million

Question 16

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is ________ and the stockholders are ________.

Accepted Answer

A) the principal;the agents 
B) the agent;the principals 
C) an agent;also agents 
D) a principal;also principals 
A) the principal;the agents 
B) the agent;the principals 
C) an agent;also agents 
D) a principal;also principals

Question 17

When Twitter sells newly issued shares of stock this is an example of

Accepted Answer

A) direct finance in a primary market. 
B) direct finance in a secondary market. 
C) indirect finance in a primary market. 
D) indirect finance in a secondary market. 
A) direct finance in a primary market. 
B) direct finance in a secondary market. 
C) indirect finance in a primary market. 
D) indirect finance in a secondary market.

Question 18

If you own a bond with a six percent coupon rate and new bonds are paying six percent,what will happen to your bond's market price?

Accepted Answer

The answer of If you own a bond with a...

Question 19

The higher the default risk on a bond,the higher the interest rate will be.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is true?

Accepted Answer

A) Corporations can issue stocks and bonds,while proprietorships cannot. 
B) Corporations have one owner,while proprietorships have many owners. 
C) Corporations face fewer taxes than do proprietorships. 
D) Proprietorships have limited liability while corporations have unlimited liability. 
A) Corporations can issue stocks and bonds,while proprietorships cannot. 
B) Corporations have one owner,while proprietorships have many owners. 
C) Corporations face fewer taxes than do proprietorships. 
D) Proprietorships have limited liability while corporations have unlimited liability.

A firm's accounting profit is measured as

A corporation is limited to how many owners?

If a corporate bond with face value of $8,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

The ability to share work and share risk is an advantage for

Describe the three main categories of firms.

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,what is the coupon rate?

If the final expressions in a present value equation used to calculate the price of a bond you are considering buying are "[$50 / (1 + .08)3] + [$500 / (1 + .08)3]",which of the following is correct?

A financial statement that sums up a firm's financial position on a particular day is

Javier wants to start a microbrewery business and is thinking of setting it up as a sole proprietorship.What are the advantages and disadvantages he will face by setting up the business as a sole proprietorship as opposed to a partnership or a corporation?

Opportunity costs are implicit costs.

The decline in starting new businesses

In many corporations,the managers of the corporation run the corporation,although the shareholders own the corporation.In this situation,

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time that member's independence from the company's CEO.If this is true,it would tend to the principal-agent problem.

Limited personal liability is an advantage for

Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs.The company earns $1.4 million in revenues and has $3.7 million in net worth.Based on this information,what is the economic profit for Harry's Hookas?

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is and the stockholders are .

When Twitter sells newly issued shares of stock this is an example of

If you own a bond with a six percent coupon rate and new bonds are paying six percent,what will happen to your bond's market price?

The higher the default risk on a bond,the higher the interest rate will be.

Which of the following statements is true?

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

A firm's accounting profit is measured as

A corporation is limited to how many owners?

If a corporate bond with face value of $8,000 has an interest rate of 4 percent paid once a year for a term of 30 years,what is the size of the coupon payment?

The ability to share work and share risk is an advantage for

Describe the three main categories of firms.

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500,what is the coupon rate?

If the final expressions in a present value equation used to calculate the price of a bond you are considering buying are "[$50 / (1 + .08)3] + [$500 / (1 + .08)3]",which of the following is correct?

A financial statement that sums up a firm's financial position on a particular day is

Javier wants to start a microbrewery business and is thinking of setting it up as a sole proprietorship.What are the advantages and disadvantages he will face by setting up the business as a sole proprietorship as opposed to a partnership or a corporation?

Opportunity costs are implicit costs.

The decline in starting new businesses

In many corporations,the managers of the corporation run the corporation,although the shareholders own the corporation.In this situation,

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time ________that member's independence from the company's CEO.If this is true,it would tend to ________ the principal-agent problem.

Limited personal liability is an advantage for

Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs.The company earns $1.4 million in revenues and has $3.7 million in net worth.Based on this information,what is the economic profit for Harry's Hookas?

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is ________ and the stockholders are ________.

When Twitter sells newly issued shares of stock this is an example of

If you own a bond with a six percent coupon rate and new bonds are paying six percent,what will happen to your bond's market price?

The higher the default risk on a bond,the higher the interest rate will be.

Which of the following statements is true?

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

Some corporate governance experts believe that serving on a company's board of directors for an extended length of time that member's independence from the company's CEO.If this is true,it would tend to the principal-agent problem.

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is and the stockholders are .