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A share of stock represents a claim on the a. output of the firm b. firm’s assets and

  A share of stock represents a claim on the

a. output of the firm

b. firm’s assets and earnings

c. assets of the board of directors

d. managers’ incomes

e. firm’s future losses

87.              ______________ elect the firm’s board of directors, and ______________ appoint the
                            firm’s management.

a. Sole proprietors; partners

b. Partners; sole proprietors

c. Employees; employers

d. Management; the board of directors

e. Stockholders; the board of directors

88.              Which of the following is unique to the corporate form of business organization?

a. hiring and firing workers

b. borrowing funds for expansion

c. production of goods and services

d. limited liability for the firm’s debts

e. ability to plow profits back into the firm

89.              Alice’s Restaurant is a business that is struggling to make a profit. Alice, the sole
                            proprietor, wins the state lottery and becomes a multi-millionaire. She plans to continue
                            to operate the restaurant because she enjoys the work. As her economist friend, the best
                            advice you could give her would be to

a. form a corporation

b. bring in a partner

c. open a second restaurant

d. work under-the-table

e. work more hours

90.              CEO is an abbreviation for

a. corporate executive organization

b. category of endless output

c. chief executive officer

d. common efficient output

e. corporate extra operation

91.              If stockholders allow the company to reinvest its profit, then

a. they will be personally liable for additional debts

b. the company’s stock price will rise

c. the company’s assets will decline

d. these dividends will be distributed to the stockholders

e. these profits can only be used to purchase equipment

92.              If the dividend yield is fixed, this is a

a. bond

b. partnership

c. firm with losses

d. common stock

e. preferred stock

93.              The first claim on a corporation’s after-tax profits is held by the

a. consumers

b. managers

c. stockholders

d. bondholders

e. government

94.              In relation to the corporation, its bondholders are

a. borrowers

b. lenders

c. customers

d. managers

e. owners

95.              What is the main advantage of holding corporate bonds, when compared to holding
                            stocks?

a. Bondholders carry voting privileges.

b. Bondholders have the option of converting bonds to stock.

c. Bondholders have first claim on a corporation’s profit.

d. Bondholders get a higher return, but with higher risk.

e. Bondholders are corporate owners so have more say.

Dec 10 2019 View more View Less

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