Que… Show more Question 1 The purchase of physical equipme

Que… Show more Question 1 The purchase of physical equipment by a firm is known in business language as Question 1 options: financial capital. profit. saving. investment. Question 2 We would expect interest rates to be lowest in the case of Question 2 options: a car loan. a signature loan. credit cards. a mortgage. Question 3 The most likely source of investment funds for a proprietorship is Question 3 options: loans from banks. the personal funds of the owner. sales of bonds. sales of stocks. Question 4 Businesses demand funds because Question 4 options: they have deficits to cover. they prefer to purchase capital goods in the current year. they make investments that they believe will increase productivity and profitability. they prefer earlier consumption to later consumption. Question 5 The value of a seat on the NYSE arises from Question 5 options: the commissions earned from handling the exchanges that take place at the NYSE. lower fees to buy valuable stocks. the prestige associated with a seat on the “Big Board.” the inside information it provides the holder. Question 6 The nominal rate of interest is 4% and the anticipated rate of inflation is 1%. What does the real rate of interest equal? Question 6 options: 4% 1% 3% 5% Question 7 Which of the following modern methods of financing a corporation was not available to corporations four hundred years ago? Question 7 options: Selling stock. Selling bonds. Reinvestment. All of these methods were used then as well as now. Question 8 The funds used to purchase capital goods are called Question 8 options: savings. investment. dividends and interest. financial capital. Question 9 A bond is Question 9 options: a nonlegal promise to provide an annual payment to the holder when the corporation makes profits. a legal claim against a firm, providing a fixed annual coupon payment and a lump-sum payment at maturity. a legal claim to a part of a corporation’s future profits that does not include voting rights. a legal claim to a part of a corporation’s future profits that includes voting rights. Question 10 In which field would economic rents likely be greatest for the best in their field? Question 10 options: Teaching Hockey Car repairing Farming Question 11 Your firm is considering buying a machine that costs $4,000.00 today. Terms of the purchase are cash on delivery (COD). The machine has a life span of 4 years and will bring $1500 in revenue each year. Interest rate is 10%. Should you buy it? Question 11 options: No, because I will earn a loss. Yes, because I will make a profit of exactly $1500. Yes, because I will make a profit but it will be less than $1500. Yes, because I will make a profit of exactly $2,000. Question 12 What is the relationship between accounting and economic profits? Question 12 options: Accounting profits are always larger than economic profits. There is no relationship between economic and accounting profits. Economic profits are always negative. Economic profits are always larger than accounting profits. Question 13 Interest rates are higher the Question 13 options: greater the risk. shorter the duration of the loan. lower the inflation rate. larger the amount of the loan, holding other things constant. Question 14 In a firm, the entrepreneur is the one who Question 14 options: works for the owner by running the firm. represents the firm in legal proceedings. takes the risks associated with a business firm. decides to hire or fire. Question 15 The difference between explicit costs and implicit costs Question 15 options: is that implicit costs are opportunity costs while explicit costs are not. is that explicit costs are opportunity costs while implicit costs are not. is that explicit costs are short-run costs and implicit costs are long-run costs. is that explicit costs involve resources that are purchased and implicit costs involve resources the firm already owns. Question 16 Many businesses end up exaggerating their profits because Question 16 options: they include opportunity costs when calculating their profits. they do not have to report the limited liability as a cost. they use economic profits rather than accounting profits. they do not include implicit costs. • Show less

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