Question 1

Firms disclose financial statements in ________ and in ________.

Accepted Answer

A) periodic filings to the federal government; annual reports to shareholders 
B) daily filings to the federal government; daily reports to shareholders 
C) monthly reports to shareholders; 5-year balance statements to the board of directors 
D) weekly filings with the SEC; monthly reports to the Fed 
A) periodic filings to the federal government; annual reports to shareholders 
B) daily filings to the federal government; daily reports to shareholders 
C) monthly reports to shareholders; 5-year balance statements to the board of directors 
D) weekly filings with the SEC; monthly reports to the Fed A

Question 2

One result of the financial meltdown of the late 2000s was that mortgage institutions ________ and ________ were brought under direct control of the government.

Accepted Answer

A) Fannie Mae; Freddie Mac 
B) Glass Steagall; Sarbanes Oxley 
C) Goldman Sachs; Morgan Stanley 
D) Lehman Brothers; FDIC 
A) Fannie Mae; Freddie Mac 
B) Glass Steagall; Sarbanes Oxley 
C) Goldman Sachs; Morgan Stanley 
D) Lehman Brothers; FDIC A

Question 3

The way in which a corporation is structured and the impact a corporation's structure has on the firm's behavior is referred to as

Accepted Answer

A) corporate taxation. 
B) structure composition theory. 
C) structural behavior. 
D) corporate governance. 
A) corporate taxation. 
B) structure composition theory. 
C) structural behavior. 
D) corporate governance. D

Question 4

What type of business has the potential for double taxation of profits and why?

Accepted Answer

Corporations earn profits that

Question 5

A corporation's board of directors

Accepted Answer

A) hire the managers of the corporation. 
B) control the day-to-day activities of the corporation. 
C) are personally liable for the debts of the corporation. 
D) are the sole owners of the corporation. 
A) hire the managers of the corporation. 
B) control the day-to-day activities of the corporation. 
C) are personally liable for the debts of the corporation. 
D) are the sole owners of the corporation.

Question 6

The financial statement that sums up a firm's revenues,costs,and profit over a period of time is its

Accepted Answer

A) income statement. 
B) balance sheet. 
C) dividend yield statement. 
D) price-earnings statement. 
A) income statement. 
B) balance sheet. 
C) dividend yield statement. 
D) price-earnings statement.

Question 7

If a corporate bond with a face value of $5,000 pays yearly coupon payments of $100,what is the coupon rate?

Accepted Answer

A) 2% 
B) 5% 
C) 10% 
D) 20% 
A) 2% 
B) 5% 
C) 10% 
D) 20%

Question 8

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

Question 9

When a business is set up as a sole proprietorship,the owner of the business faces limited liability.

Accepted Answer

A) True 
 B)False

Question 10

What is the formula you should use to determine a bank account's future value in one year?

Accepted Answer

A) Future value equals the present value plus the rate of interest. 
B) Future value equals the present value minus the rate of interest. 
C) Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D) Future value equals the present value divided by one plus the rate of interest in decimals. 
A) Future value equals the present value plus the rate of interest. 
B) Future value equals the present value minus the rate of interest. 
C) Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D) Future value equals the present value divided by one plus the rate of interest in decimals.

Question 11

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

Accepted Answer

A) had more than doubled in price. 
B) had declined by nearly 40 percent from the IPO price. 
C) languished at the same $38 per share price. 
D) had increased by almost 60 percent from the IPO price. 
A) had more than doubled in price. 
B) had declined by nearly 40 percent from the IPO price. 
C) languished at the same $38 per share price. 
D) had increased by almost 60 percent from the IPO price.

Question 12

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 13

Net worth and stockholders' equity are both equal to the difference between assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Who selects the board of directors of a corporation?

Accepted Answer

A) the state where the corporation is chartered 
B) employees 
C) stockholders 
D) managers 
A) the state where the corporation is chartered 
B) employees 
C) stockholders 
D) managers

Question 15

If you want to know the present value of $10,000 received in one year,and the interest rate is 4 percent,what formula can you use?

Accepted Answer

A) Present value equals $10,000 times 0.04. 
B) Present value equals $10,000 divided by 1.04 
C) Present value equals 1.04 divided by $10,000. 
D) Present value equals $10,000 times 1.04. 
A) Present value equals $10,000 times 0.04. 
B) Present value equals $10,000 divided by 1.04 
C) Present value equals 1.04 divided by $10,000. 
D) Present value equals $10,000 times 1.04.

Question 16

When you buy newly-issued shares of Facebook 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.

Question 17

If a stock's dividend is expected to grow at a constant rate of eight percent in the future and it has just paid a dividend of $1.25 a share,and you have an alternative investment of equal risk that will earn a 12 percent rate of return,what would you be willing to pay per share for this stock?

Accepted Answer

A) $31.25 
B) $1.40 
C) $1.25 
D) $1.12 
A) $31.25 
B) $1.40 
C) $1.25 
D) $1.12

Question 18

If a stock's dividend is expected to grow at a constant rate of 6 percent in the future and it has just paid a dividend of $3.00 per share,and you have an alternative investment of equal risk that will earn a 9 percent rate of return,what would you be willing to pay per share for this stock?

Accepted Answer

A) $9 
B) $20 
C) $45 
D) $106 
A) $9 
B) $20 
C) $45 
D) $106

Question 19

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

Accepted Answer

A) 475/(1.6)3 
B) 475/(1.06)3 
C) 475 × 1.6 × 3 
D) 3.06/475 
A) 475/(1.6)3 
B) 475/(1.06)3 
C) 475 × 1.6 × 3 
D) 3.06/475

Question 20

Which type of business has the most 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.

Firms disclose financial statements in and in .

One result of the financial meltdown of the late 2000s was that mortgage institutions and were brought under direct control of the government.

The way in which a corporation is structured and the impact a corporation's structure has on the firm's behavior is referred to as

What type of business has the potential for double taxation of profits and why?

A corporation's board of directors

The financial statement that sums up a firm's revenues,costs,and profit over a period of time is its

If a corporate bond with a face value of $5,000 pays yearly coupon payments of $100,what is the coupon rate?

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?

When a business is set up as a sole proprietorship,the owner of the business faces limited liability.

What is the formula you should use to determine a bank account's future value in one year?

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

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.

Net worth and stockholders' equity are both equal to the difference between assets and liabilities.

Who selects the board of directors of a corporation?

If you want to know the present value of $10,000 received in one year,and the interest rate is 4 percent,what formula can you use?

When you buy newly-issued shares of Facebook stock,this transaction takes place in the

If a stock's dividend is expected to grow at a constant rate of eight percent in the future and it has just paid a dividend of $1.25 a share,and you have an alternative investment of equal risk that will earn a 12 percent rate of return,what would you be willing to pay per share for this stock?

If a stock's dividend is expected to grow at a constant rate of 6 percent in the future and it has just paid a dividend of $3.00 per share,and you have an alternative investment of equal risk that will earn a 9 percent rate of return,what would you be willing to pay per share for this stock?

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

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

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

Firms disclose financial statements in ________ and in ________.

One result of the financial meltdown of the late 2000s was that mortgage institutions ________ and ________ were brought under direct control of the government.

The way in which a corporation is structured and the impact a corporation's structure has on the firm's behavior is referred to as

What type of business has the potential for double taxation of profits and why?

A corporation's board of directors

The financial statement that sums up a firm's revenues,costs,and profit over a period of time is its

If a corporate bond with a face value of $5,000 pays yearly coupon payments of $100,what is the coupon rate?

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?

When a business is set up as a sole proprietorship,the owner of the business faces limited liability.

What is the formula you should use to determine a bank account's future value in one year?

In May 2012,Facebook stock sold for $38 per share in its initial public offering (IPO).More than a year later,in June 2013,the value of Facebook stock

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.

Net worth and stockholders' equity are both equal to the difference between assets and liabilities.

Who selects the board of directors of a corporation?

If you want to know the present value of $10,000 received in one year,and the interest rate is 4 percent,what formula can you use?

When you buy newly-issued shares of Facebook stock,this transaction takes place in the

If a stock's dividend is expected to grow at a constant rate of eight percent in the future and it has just paid a dividend of $1.25 a share,and you have an alternative investment of equal risk that will earn a 12 percent rate of return,what would you be willing to pay per share for this stock?

If a stock's dividend is expected to grow at a constant rate of 6 percent in the future and it has just paid a dividend of $3.00 per share,and you have an alternative investment of equal risk that will earn a 9 percent rate of return,what would you be willing to pay per share for this stock?

The present value of $475 received 3 years in the future would be calculated as which of the following when the interest rate is 6 percent?

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

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

Firms disclose financial statements in and in .

One result of the financial meltdown of the late 2000s was that mortgage institutions and were brought under direct control of the government.

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.