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. A

Question 2

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50, 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% A

Question 3

When you buy previously issued shares of Twitter stock, this transaction takes place in the

Accepted Answer

A) primary market. 
B) bond market. 
C) secondary market. 
D) bear market. 
A) primary market. 
B) bond market. 
C) secondary market. 
D) bear market. C

Question 4

Corporations are legally owned by their shareholders.

Accepted Answer

A) True 
 B)False

Question 5

Generally with bond ratings, the higher the rating, the ________ the interest rate an investor will receive and the ________ the risk that the issuer of the bond will default.

Accepted Answer

A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower 
A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower

Question 6

When someone takes out a mortgage loan to buy a house, the mortgage lender can take possession of the house and sell it if the borrower defaults on the loan because the house is being pledged as ________ for the loan.

Accepted Answer

A) goodwill 
B) a liability 
C) insurance 
D) collateral 
A) goodwill 
B) a liability 
C) insurance 
D) collateral

Question 7

Define a partnership.

Accepted Answer

A partnership is a f

Question 8

What is corporate governance?

Accepted Answer

Corporate governance refers to

Question 9

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

Accepted Answer

Sole proprietorships and partn

Question 10

Traditionally, Wall Street investment banks had been organized as partnerships, but by 2000 they had converted to being publicly traded corporations.As partnerships, the principle-agent problem is ________, but as publicly traded corporations, the principal-agent problem is often ________.

Accepted Answer

A) increased; more severe 
B) increased; less severe 
C) reduced; more severe 
D) reduced; less severe 
A) increased; more severe 
B) increased; less severe 
C) reduced; more severe 
D) reduced; less severe

Question 11

Define a sole proprietorship.

Accepted Answer

A firm own

Question 12

When an investor buys a corporate bond

Accepted Answer

A) the investor becomes part owner of the corporation. 
B) the principal of the bond is a loan to the corporation. 
C) the interest made on the bond represents the bondholder's limited liability in the company. 
D) the face value of the bond is equal to what the investor paid for the bond. 
A) the investor becomes part owner of the corporation. 
B) the principal of the bond is a loan to the corporation. 
C) the interest made on the bond represents the bondholder's limited liability in the company. 
D) the face value of the bond is equal to what the investor paid for the bond.

Question 13

A sole proprietorship is

Accepted Answer

A) the easiest type of business to set up. 
B) the most difficult type of business to set up. 
C) the most expensive type of business to set up. 
D) the least profitable type of business to set up. 
A) the easiest type of business to set up. 
B) the most difficult type of business to set up. 
C) the most expensive type of business to set up. 
D) the least profitable type of business to set up.

Question 14

Generally with bond ratings, the lower the rating, the ________ the interest rate an investor will receive and the ________ the the risk that the issuer of the bond will default.

Accepted Answer

A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower 
A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower

Question 15

How do firms raise external funds through indirect finance?

Accepted Answer

With indirect finance, funds f

Question 16

How does the owner of a sole proprietorship relate to the business?

Accepted Answer

A) The owner and the business are separate legal entities. 
B) The owner and the business are not separate legal entities. 
C) The assets of the owner are considered separate from the assets of the business. 
D) None of these describe the legal relationship of the owner to the business. 
A) The owner and the business are separate legal entities. 
B) The owner and the business are not separate legal entities. 
C) The assets of the owner are considered separate from the assets of the business. 
D) None of these describe the legal relationship of the owner to the business.

Question 17

Unlike firms that sell stock in financial markets, which are known as ________ firms, companies which do not sell stock in financial markets are known as ________ firms.

Accepted Answer

A) public; private 
B) open; closed 
C) corporate; proprietary 
D) stock market; bond market 
A) public; private 
B) open; closed 
C) corporate; proprietary 
D) stock market; bond market

Question 18

How much is a bond worth if it pays $20 in coupon payments at the end of each year for 4 years and $1,000 at the end of the fourth year, if the interest rate is 5%?

Accepted Answer

A) $822.70 
B) $893.62 
C) $1,070.92 
D) $1,080 
A) $822.70 
B) $893.62 
C) $1,070.92 
D) $1,080

Question 19

What is the present value of $888 in a one year if the current rate of interest is five percent?

Accepted Answer

A) $4,440 
B) $845.71 
C) $177.60 
D) none of these 
A) $4,440 
B) $845.71 
C) $177.60 
D) none of these

Question 20

By tying the salaries of top corporate managers to the price of the corporation's stock, corporations hope to avoid

Accepted Answer

A) corporate governance. 
B) conflict between the CFO and the CEO. 
C) the principal-agent problem. 
D) paying high salaries to their managers. 
A) corporate governance. 
B) conflict between the CFO and the CEO. 
C) the principal-agent problem. 
D) paying high salaries to their managers.

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

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50, what is the coupon rate?

When you buy previously issued shares of Twitter stock, this transaction takes place in the

Corporations are legally owned by their shareholders.

Generally with bond ratings, the higher the rating, the the interest rate an investor will receive and the the risk that the issuer of the bond will default.

When someone takes out a mortgage loan to buy a house, the mortgage lender can take possession of the house and sell it if the borrower defaults on the loan because the house is being pledged as ________ for the loan.

Define a partnership.

What is corporate governance?

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

Traditionally, Wall Street investment banks had been organized as partnerships, but by 2000 they had converted to being publicly traded corporations.As partnerships, the principle-agent problem is , but as publicly traded corporations, the principal-agent problem is often .

Define a sole proprietorship.

When an investor buys a corporate bond

A sole proprietorship is

Generally with bond ratings, the lower the rating, the the interest rate an investor will receive and the the the risk that the issuer of the bond will default.

How do firms raise external funds through indirect finance?

How does the owner of a sole proprietorship relate to the business?

Unlike firms that sell stock in financial markets, which are known as firms, companies which do not sell stock in financial markets are known as firms.

How much is a bond worth if it pays $20 in coupon payments at the end of each year for 4 years and $1,000 at the end of the fourth year, if the interest rate is 5%?

What is the present value of $888 in a one year if the current rate of interest is five percent?

By tying the salaries of top corporate managers to the price of the corporation's stock, corporations hope to avoid

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

Filters

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

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

If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50, what is the coupon rate?

When you buy previously issued shares of Twitter stock, this transaction takes place in the

Corporations are legally owned by their shareholders.

Generally with bond ratings, the higher the rating, the ________ the interest rate an investor will receive and the ________ the risk that the issuer of the bond will default.

When someone takes out a mortgage loan to buy a house, the mortgage lender can take possession of the house and sell it if the borrower defaults on the loan because the house is being pledged as ________ for the loan.

Define a partnership.

What is corporate governance?

In which types of business do owners have unlimited personal liability and in which do owners have limited personal liability?

Traditionally, Wall Street investment banks had been organized as partnerships, but by 2000 they had converted to being publicly traded corporations.As partnerships, the principle-agent problem is ________, but as publicly traded corporations, the principal-agent problem is often ________.

Define a sole proprietorship.

When an investor buys a corporate bond

A sole proprietorship is

Generally with bond ratings, the lower the rating, the ________ the interest rate an investor will receive and the ________ the the risk that the issuer of the bond will default.

How do firms raise external funds through indirect finance?

How does the owner of a sole proprietorship relate to the business?

Unlike firms that sell stock in financial markets, which are known as ________ firms, companies which do not sell stock in financial markets are known as ________ firms.

How much is a bond worth if it pays $20 in coupon payments at the end of each year for 4 years and $1,000 at the end of the fourth year, if the interest rate is 5%?

What is the present value of $888 in a one year if the current rate of interest is five percent?

By tying the salaries of top corporate managers to the price of the corporation's stock, corporations hope to avoid

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

Filters

Generally with bond ratings, the higher the rating, the the interest rate an investor will receive and the the risk that the issuer of the bond will default.

Traditionally, Wall Street investment banks had been organized as partnerships, but by 2000 they had converted to being publicly traded corporations.As partnerships, the principle-agent problem is , but as publicly traded corporations, the principal-agent problem is often .

Generally with bond ratings, the lower the rating, the the interest rate an investor will receive and the the the risk that the issuer of the bond will default.

Unlike firms that sell stock in financial markets, which are known as firms, companies which do not sell stock in financial markets are known as firms.