question
Economic rent is
A.
the amount that must be paid to secure housing.
B.
the amount paid for a resource over and above its opportunity cost.
C.
the payment to land only.
D.
referring to the profits of a firm.
A.
the amount that must be paid to secure housing.
B.
the amount paid for a resource over and above its opportunity cost.
C.
the payment to land only.
D.
referring to the profits of a firm.
answer
B.
the amount paid for a resource over and above its opportunity cost.
the amount paid for a resource over and above its opportunity cost.
question
All of the following are advantages of proprietorships except:
A.
easy to dissolve.
B.
unlimited liability.
C.
taxes only paid once.
D.
easy to form.
A.
easy to dissolve.
B.
unlimited liability.
C.
taxes only paid once.
D.
easy to form.
answer
B.
unlimited liability.
unlimited liability.
question
An investor wishes to own a part of a company and desires preferential treatment in the distribution of dividends. The investor should purchase
A.
common stock.
B.
bonds.
C.
preferred stock.
D.
commodities.
A.
common stock.
B.
bonds.
C.
preferred stock.
D.
commodities.
answer
C.
preferred stock.
preferred stock.
question
The real rate of interest equals 4.00 percent and the anticipated rate of inflation is 3.0 percent. What does the nominal rate of interest equal?
answer
7.0%
question
According to the random walk theory of stock market pricing,
A.
if the price went up today it will probably go up tomorrow.
B.
people with economic training can make certain profits in the stock market.
C.
there are no predictable trends in stock prices.
D.
on any given day, fifty percent of the stocks will increase in price and fifty percent will decrease in price.
A.
if the price went up today it will probably go up tomorrow.
B.
people with economic training can make certain profits in the stock market.
C.
there are no predictable trends in stock prices.
D.
on any given day, fifty percent of the stocks will increase in price and fifty percent will decrease in price.
answer
C.
there are no predictable trends in stock prices.
there are no predictable trends in stock prices.
question
Which of the following is not a main source of corporate funds?
A.
Bonds.
B.
Loans from banks.
C.
Stock.
D.
Reinvestment of profits.
A.
Bonds.
B.
Loans from banks.
C.
Stock.
D.
Reinvestment of profits.
answer
B.
Loans from banks.
Loans from banks.
question
With respect to the allocation of resources, which statement is true about economic rent?
A.
Economic rent leads to inefficiencies.
B.
Economic rent allocates resources to their highest-valued use.
C.
It is hard to determine whether resources are being allocated efficiently since salaries are so high.
D.
Economic rent is not related to the allocation of resources.
A.
Economic rent leads to inefficiencies.
B.
Economic rent allocates resources to their highest-valued use.
C.
It is hard to determine whether resources are being allocated efficiently since salaries are so high.
D.
Economic rent is not related to the allocation of resources.
answer
B.
Economic rent allocates resources to their highest-valued use.
Economic rent allocates resources to their highest-valued use.
question
The type of business organizations that are responsible for the greatest share of all business revenues in the U.S. are
A.
multi-level marketing companies.
B.
corporations.
C.
proprietorships.
D.
partnerships.
A.
multi-level marketing companies.
B.
corporations.
C.
proprietorships.
D.
partnerships.
answer
B.
corporations.
corporations.
question
If the closing price of a stock traded on a particular day is $64 per share, and the dividend paid is $2.62 per share
A.
the yield is 4.1%.
B.
the volume of shares traded that day is 167.7
C.
the yield of the stock has fallen.
D.
the price earnings ratio is 24.4
A.
the yield is 4.1%.
B.
the volume of shares traded that day is 167.7
C.
the yield of the stock has fallen.
D.
the price earnings ratio is 24.4
answer
A.
the yield is 4.1%.
the yield is 4.1%.
question
The PE ratio measures
A.
preferred investors of investors.
B.
the stock price divided by the earnings per share.
C.
earnings per investment.
D.
earnings per share.
A.
preferred investors of investors.
B.
the stock price divided by the earnings per share.
C.
earnings per investment.
D.
earnings per share.
answer
B.
the stock price divided by the earnings per share.
the stock price divided by the earnings per share.
question
All of the following are advantages of proprietorships except
A.
they are easy to form and dissolve.
B.
limited liability of the proprietor.
C.
profit is only taxed once.
D.
all decision-making power resides with the sole proprietor.
A.
they are easy to form and dissolve.
B.
limited liability of the proprietor.
C.
profit is only taxed once.
D.
all decision-making power resides with the sole proprietor.
answer
B.
limited liability of the proprietor.
limited liability of the proprietor.
question
The interest rate can vary depending upon what a loan will be used for. Which of the following factors will not influence the annual interest rate?
A.
Length of loan.
B.
Risk.
C.
Economic costs.
D.
Handling charges.
A.
Length of loan.
B.
Risk.
C.
Economic costs.
D.
Handling charges.
answer
C.
Economic costs.
Economic costs.
question
Why do some sports figures get economic rent?
A.
Because of the way accounting profits are calculated.
B.
The present value calculation determines the person's salary.
C.
The legal forms of business dictate that this happen.
D.
Their special talents cannot be replicated exactly.
A.
Because of the way accounting profits are calculated.
B.
The present value calculation determines the person's salary.
C.
The legal forms of business dictate that this happen.
D.
Their special talents cannot be replicated exactly.
answer
D.
Their special talents cannot be replicated exactly.
Their special talents cannot be replicated exactly.
question
Making stock trades based on "inside information"
A.
is also referred to as the random walk theory of stock prices.
B.
is guaranteed to help you "beat the market."
C.
is illegal.
D.
can only be done by stockbrokers.
A.
is also referred to as the random walk theory of stock prices.
B.
is guaranteed to help you "beat the market."
C.
is illegal.
D.
can only be done by stockbrokers.
answer
C.
is illegal.
is illegal.
question
Jill took $50,000 that she had in savings and started her own business. If left in investments she would have earned $5,000 this year. Jill also left a job that paid her $60,000 a year and plans on paying herself $40,000. Materials and other labor costs will be $70,000. The company is located in a building that Jill owns. She could have rented the building out for $30,000 but plans on charging the company only the insurance and mortgage payment of $20,000. What do the accounting and economic costs equal?
A.
Accounting costs = $110,000; Economic costs = $200,000
B.
Accounting costs = $160,000; Economic costs = $240,000
C.
Accounting costs = $130,000; Economic costs = $165,000
D.
Accounting costs = $60,000; Economic costs = $90,000
E.
Accounting costs = $130,000; Economic costs = $130,000
A.
Accounting costs = $110,000; Economic costs = $200,000
B.
Accounting costs = $160,000; Economic costs = $240,000
C.
Accounting costs = $130,000; Economic costs = $165,000
D.
Accounting costs = $60,000; Economic costs = $90,000
E.
Accounting costs = $130,000; Economic costs = $130,000
answer
C.
Accounting costs = $130,000; Economic costs = $165,000
Accounting costs = $130,000; Economic costs = $165,000
question
A firm can obtain funds for investing by
A.
reinvesting profits.
B.
selling stocks.
C.
selling bonds.
D.
All of the above.
A.
reinvesting profits.
B.
selling stocks.
C.
selling bonds.
D.
All of the above.
answer
D.
All of the above.
All of the above.
question
n important difference between common stock and preferred stock is that
A.
preferred stockholders can vote on major policy decisions and common stockholders cannot.
B.
common stockholders are entitled to a share of the profits but preferred stockholders are entitled only to the profits of above-normal years.
C.
preferred stockholders are entitled to their dividends before common stockholders.
D.
common stock is sold to anyone while preferred stock is sold to other corporations only.
A.
preferred stockholders can vote on major policy decisions and common stockholders cannot.
B.
common stockholders are entitled to a share of the profits but preferred stockholders are entitled only to the profits of above-normal years.
C.
preferred stockholders are entitled to their dividends before common stockholders.
D.
common stock is sold to anyone while preferred stock is sold to other corporations only.
answer
C.
preferred stockholders are entitled to their dividends before common stockholders.
preferred stockholders are entitled to their dividends before common stockholders.
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