Economic Question
AmazingExpertQuestion 1
1.
A shareholder in a corporation
Answer
| a. | may not sell his or her share of ownership in the business without the business dissolving. |
|
| b. | can earn interest, but not dividends, from the profits of the business. |
|
| c. | is a part owner of the business. |
|
| d. | is personally liable for the debts of the corporation. |
|
4 points
Question 2
1.
Suppose that you borrow $10,000 for one year, and at the end of the year, you must repay $11,450. The interest rate is
Answer
| a. | 11.4 percent. |
|
| b. | 14.5 percent. |
|
| c. | 18 percent. |
|
| d. | 12.7 percent. |
|
4 points
Question 3
1.
The owners of preferred stock
Answer
| a. | receive preferential treatment in the payment of dividends. |
|
| b. | have the same voting rights as owners of common stock. |
|
| c. | are the original owners of the corporation. |
|
| d. | have the same rights as bondholders. |
|
4 points
Question 4
1.
The main advantage of a corporate form of organization is that
Answer
| a. | shareholders have limited liability. |
|
| b. | shareholders have unlimited liability. |
|
| c. | shareholders are not subject to double taxation. |
|
| d. | all corporate profits must be distributed as dividends. |
|
4 points
Question 5
1.
Which of the following is the most common form of business organization in the United States?
Answer
| a. | Proprietorship |
|
| b. | Partnership |
|
| c. | Corporation |
|
| d. | S-corporation |
|
4 points
Question 6
1.
Suppose that you open your own business and earn an accounting profit of $30,000 per year. When you started your business, you left a job that paid you a $25,000 salary annually. Also, suppose that you invested $70,000 of your own money to start up your business. If the normal rate of return on capital is 12 percent, your economic profit is
Answer
| a. | $66,400. |
|
| b. | -$3,400. |
|
| c. | $6,600. |
|
| d. | -$8,400. |
|
4 points
Question 7
1.
The random walk theory says that
Answer
| a. | stock prices follow a trend for varying periods of time. |
|
| b. | successive stock prices increase more than they decrease. |
|
| c. | successive stock prices are dependent on the weighted average of the previous week's prices. |
|
| d. | successive stock prices are independent of each other. |
|
4 points
Question 8
1.
Accounting profits are total revenues minus
Answer
| a. | all relevant opportunity costs. |
|
| b. | explicit and implicit costs. |
|
| c. | explicit costs and all other relevant opportunity costs. |
|
| d. | explicit costs. |
|
4 points
Question 9
1.
The PE ratio for a stock is
Answer
| a. | the predicted earnings per share of the stock divided by its current yield. |
|
| b. | the current yield of the stock. |
|
| c. | the price of the stock divided by its earnings per share. |
|
| d. | the predicted volatility of the stock. |
|
4 points
Question 10
1.
The most common type of firm in the United States is the
Answer
| a. | proprietorship. |
|
| b. | partnership. |
|
| c. | corporation. |
|
| d. | limited partnership. |
|
4 points
Question 11
1.
Economic profits equal
Answer
| a. | accounting profits. |
|
| b. | accounting profits less economic rents. |
|
| c. | total revenue less the opportunity costs of all factors of production. |
|
| d. | accounting profits plus the owner's labor opportunity costs. |
|
4 points
Question 12
1.
A difference between a share of stock in a corporation and a corporate bond is that
Answer
| a. | the share of stock is a legal claim while the bond is not. |
|
| b. | the bond owner has voting rights within the corporation whereas the stockholder does not. |
|
| c. | the bond owner is entitled to receive a fixed annual coupon payment plus a lump-sum payment at the bond's maturity date, whereas the stockholder is entitled to a share of future profits. |
|
| d. | stocks are issued in return for funds that are lent to the corporation. |
|
4 points
Question 13
1.
A pure economic rent is
Answer
| a. | a payment to a resource owner over and above what is necessary to keep the resource in its current use. |
|
| b. | a payment to a resource owner just sufficient to keep its supply constant. |
|
| c. | the inverse of economic profit. |
|
| d. | the competitive rental rate on capital. |
|
4 points
Question 14
1.
Economic rent is any payment
Answer
| a. | received by the owner of a resource in perfectly elastic supply. |
|
| b. | received by the owner of a resource with a supply curve that is not horizontal. |
|
| c. | in excess of the resource's opportunity cost. |
|
| d. | below that of a normal profit or return. |
|
4 points
Question 15
1.
Implicit costs are measured by
Answer
| a. | the value of alternative uses of the resources used in production. |
|
| b. | actual expenses paid by the firm. |
|
| c. | total revenues minus total costs. |
|
| d. | comparing the compensation packages of the CEOs in the industry. |
|
4 points
Question 16
1.
Economic profit can be calculated as
Answer
| a. | total revenue - explicit costs. |
|
| b. | total revenue - implicit costs. |
|
| c. | total revenue - explicit costs - implicit costs. |
|
| d. | total revenue - fixed costs. |
|
4 points
Question 17
1.
Accounting costs represent
Answer
| a. | explicit costs paid by the firm. |
|
| b. | opportunity costs. |
|
| c. | both sunk and future costs. |
|
| d. | long run costs only. |
|
4 points
Question 18
1.
The part of corporate profits that is paid to the shareholders of a corporation is
Answer
| a. | retained earnings. |
|
| b. | shareholders. |
|
| c. | dividends. |
|
| d. | business revenue. |
|
4 points
Question 19
1.
The real rate of interest is
Answer
| a. | the nominal interest rate minus the rate of inflation. |
|
| b. | the interest rate actually paid explicitly by the borrower. |
|
| c. | the interest rate received by the lender minus the handling charges of the loan. |
|
| d. | the average rate of interest over the last 20 years. |
|
4 points
Question 20
1.
In a partnership, legal responsibility for all debts is
Answer
| a. | shared by the partners. |
|
| b. | passed to the shareholders. |
|
| c. | paid by the principle owner. |
|
| d. | handled by the bondholders. |
|
4 points
Question 21
1.
Another term to describe the normal rate of return on capital is the
Answer
| a. | fixed cost of capital. |
|
| b. | depreciation cost of capital. |
|
| c. | opportunity cost of capital. |
|
| d. | monopoly rent. |
|
4 points
Question 22
1.
Bond coupon payments represent
Answer
| a. | dividends paid to owners. |
|
| b. | interest on the amount borrowed. |
|
| c. | capital gains for tax purposes. |
|
| d. | payments to preferred shareholders. |
|
4 points
Question 23
1.
The yield percentage of a stock is calculated as
Answer
| a. | the corporation's net worth divided by the number of shareholders. |
|
| b. | the book value of the stock divided by the number of shareholders. |
|
| c. | the stock dividend divided by the price of the stock. |
|
| d. | the expected appreciation of the stock. |
|
4 points
Question 24
1.
The nominal rate of interest is
Answer
| a. | the same as the price level. |
|
| b. | the real rate of interest minus the previous year's change in the price level. |
|
| c. | the interest rate actually paid by the borrower. |
|
| d. | lower than the real rate in a period of inflation. |
|
4 points
Question 25
1.
In an inflationary atmosphere, lenders will
Answer
| a. | desire a lower nominal interest rate to increase the real rate. |
|
| b. | desire a higher nominal interest rate to protect against the inflation. |
|
| c. | tend to see the real rate of interest increase, particularly if the inflation is unforeseen. |
|
| d. | have the real rate of interest guaranteed by the Federal Reserve Board. |
|
11 years ago
Purchase the answer to view it
answer.docx
