Answer Choices:
a. True
b. False
Answer:
a. True
Question: Primary markets are large and important, while secondary markets are smaller and less important.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: Which of the following statements is CORRECT?
Answer Choices:
a. One of the advantages of the corporate form of organization is that it avoids double taxation.
b. It is easier to transfer one’s ownership interest in a partnership than in a corporation.
c. One of the disadvantages of a proprietorship is that the proprietor is exposed to unlimited liability.
d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights.
Answer:
c
Question: Private markets are those like the NYSE, where transactions are handled by members of the organization, while public markets are those like the NASDAQ, where anyone can make transactions.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: Some partners in a partnership may have different rights, privileges, and responsibilities than other partners.
Answer Choices:
a. True
b. False
Answer:
a. True
Question: A disadvantage of the corporate form of organization is that corporate stockholders are more exposed to personal liabilities in the event of bankruptcy than are investors in a typical partnership.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: One advantage of the corporate form of organization is that it avoids double taxation.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: Partnerships and proprietorships generally have a tax advantage over corporations.
Answer Choices:
a. True
b. False
Answer:
a. True
Question: In order to maximize its shareholders’ value, a firm’s management must attempt to maximize the expected EPS.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: An advantage of the corporate form of organization is that corporations are generally less highly regulated than proprietorships and partnerships.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: If you wanted to know what rate of return stocks have provided in the past, you could examine data on the Dow Jones Industrial Index, the S&P 500 Index, or the NASDAQ Index.
Answer Choices:
a. True
b. False
Answer:
a. True
Question: The NYSE is defined as a “primary” market because it is one of the largest and most important stock markets in the world.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: It is generally harder to transfer one’s ownership interest in a partnership than in a corporation.
Answer Choices:
a. True
b. False
Answer:
a. True
Question: The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking individual. The CEO generally works under the board and its chairman, and the board generally has the authority to remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to have the board voted out and a new board voted in should a conflict arise. It is possible for a person to simultaneously serve as CEO and chairman of the board, though many corporate control experts believe it is bad to vest both offices in the same person.
Answer Choices:
a. True
b. False
Answer:
a. True
Question: Trades on the NYSE are generally completed by having a brokerage firm acting as a “dealer” buy securities and adding them to its inventory or selling from its inventory. The NASDAQ, on the other hand, operates as an auction market, where buyers offer to buy, and sellers to sell, and the price is negotiated on the floor of the exchange.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: It is generally less expensive to form a corporation than a proprietorship because, with a proprietorship, extensive legal documents are required.
Answer Choices:
a. True
b. False
Answer:
b. False
Question: Which of the following statements is CORRECT?
Answer Choices:
a. Corporations generally face fewer regulations than proprietorships.
b. Corporate shareholders are exposed to unlimited liability.
c. It is usually easier to transfer ownership in a corporation than in a partnership.
d. Corporate shareholders are exposed to unlimited liability, but this factor is offset by the tax advantages of incorporation.
e. There is a tax disadvantage to incorporation, and there is no way any corporation can escape this disadvantage, even if it is very small.
Answer:
c
Question: As a result of financial scandals occurring during the past decade, there has been a strong push to improve business ethics.
Answer Choices:
a. True
b. False
Answer:
a. True
Question: If the tax laws were changed so that $0.50 out of every $1.00 of interest paid by a corporation was allowed as a tax-deductible expense, this would probably encourage companies to use more debt financing than they presently do, other things held constant.
Answer:
Options:
Question: Which of the following is a primary market transaction?
Answer:
Options: