Chapter: Real Firms and their Financing
Your Full Name:
Your Email Address: (required)
The Email address of an instructor to mail your quiz results:
1. Most American firms are
a. corporations.
b. collectives.
c. partnerships.
d. individual proprietorships.
2. The two main disadvantages of the proprietorship are
a. limited liability and higher taxes than other forms of organization.
b. unlimited liability and the difficulty of raising financial capital.
c. legal complications and higher taxes than other forms of organization.
d. difficulty of raising funds and limited liability.
3. A corporation is legally owned by its
a. chief executive officer.
b. board of directors.
c. bondholders.
d. stockholders.
4. Double taxation of corporate earnings
a. tends to restrict the activities of corporate firms.
b. causes stockholders to earn a lower return than they would on other securities of comparable risk.
c. results in more investment in research and development.
d. All of the answers above are correct.
5. In the traditional view, stocks are _______ than bonds to the firm that issues them and ________ than bonds to the investor who purchases them.
a. less risky; less risky
b. less risky; riskier
c. riskier; less risky
d. riskier; riskier
6. Brokerage houses may differ in the
a. fees they charge.
b. services they provide.
c. stock exchanges on which they hold seats.
d. All of the above are correct.
7. A company's P/E ratio, listed on the newspaper stock market page, is the ratio of
a. profits to expenses.
b. the current price of stock to the previous year's earnings per share.
c. the price of the stock to the dividend per share.
d. the price of the stock to the commission earned by the stockbroker.
8. The actions of speculators in a market tend to _______ when the price of the good is low and thereby to _______ the price.
a. shift the demand curve out; raise
b. shift the demand curve in; lower
c. shift the supply curve out; lower
d. shift the supply curve in; raise
9. If stock prices follow a random walk,
a. speculation in the stock market destabilizes prices.
b. a stock's past performance is not a good indicator of its future performance.
c. rumors, news, and other "signals" have no effect on stock prices.
d. the stock market does not participate in channeling resources toward firms with high stock prices.
10. Bond prices in the marketplace will fall when
a. interest rates fall.
b. the company is losing money.
c. interest rates rise.
d. the company is making money.
(c) 2003 South-Western, All Rights Reserved
webmaster