ECON Chapter 6

Ace your homework & exams now with Quizwiz!

Although only -(a)- percent of all firms are corporations, corporations account for the -(b)- of revenue and profits.

(a)- 20 (b)- The majority

A flow of funds from savers to borrowers through financial intermediaries such as bans is -(a)- finance, while a flow of funds from savers to firms through financial markets, such as the New York Stock Exchange is -(b)- finance.

(a)- Indirect (b)- Direct

Economic profit is equal to a firm's revenues minus its costs, -(a)-. Accounting profit is -(b)- economic profit.

(a)- both explicit and implicit (b)- larger than

The price investors are willing to pay for a financial asset should be -(a)- the value of the payments they will receive as a result of owning the assets

(a)- equal to

Partnership is

A firm owned jointly by two or more persons and not organized as a corporation.

The principal- agent problem occurs when

An agent pursues his own interests rather than the interests of the principal who hired him.

An income statement shows a firm's A. Profits B. Costs C. Revenues D. All of the above

D. All of the above

The owners of corporations have

Limited liability

Present Vale Formula

Present Value= (present value)/ (1+ interest rate)^time

The landmark legislation that helps guard against inflated profit and hidden liabilities on balance sheets to protect against Gina gel scandals is the

Sarbanes-Oxley Act of 2002

Stock Price Formula

Stock Price = (Dividend)/ (interest - growth rate) Convert percentages to decimals

Changes in the value of firm's stocks and bonds offer important information for a firms agency. If the price is increasing investors are _____ and are providing information that indicates the firms managers might want to _____ the business.

more optimistic; expand

Subtracting the value of a firm's liabilities from the value of its assets leaves its

net worth

A(n) _____ is a fin shel security that represents partial ownership of a firm, while a ____ is a financial security that represents a promise to repay a fixed amount of funds.

stock; bond


Related study sets

questions on musculoskeletal diseases

View Set

Ch.6: Illinois Statutes and Requirements Pertinent To Life Only

View Set

U7 Exponential Functions - L1 Exponential Growth Functions

View Set

Chapter 20- Starting a Business: LLCs and Other Options

View Set

California: Real Estate Practice ..

View Set