Essay Mid Term Part 1

Question 1
2 out of 2 points

Which of the following statements is CORRECT?
Answer

Selected Answer: The NYSE operates as an auction market, whereas the Nasdaq is a dealer market.
Correct Answer: The NYSE operates as an auction market, whereas the Nasdaq is a dealer market.

Question 2
2 out of 2 points

Which of the following statements is CORRECT?
Answer

Selected Answer: If expected inflation increases, interest rates are likely to increase.
Correct Answer: If expected inflation increases, interest rates are likely to increase.

Question 3
2 out of 2 points

Which of the following could explain why a business might choose to operate as a corporation rather than as a sole proprietorship or a partnership?
Answer

Selected Answer: Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization.
Correct Answer: Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization.

Question 4
2 out of 2 points

You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of:
Answer

Selected Answer: A secondary market transaction.
Correct Answer: A secondary market transaction.

Question 5
2 out of 2 points

Which of the following statements is CORRECT?
Answer

Selected Answer: One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.
Correct Answer: One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.

Question 6
2 out of 2 points

Which of the following statements is CORRECT?
Answer

Selected Answer: The justification for the "light" regulation of hedge funds is that only "sophisticated" investors with high net worths and high incomes are permitted to invest in these funds, and such investors supposedly can do the necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.
Correct Answer: The justification for the "light" regulation of hedge funds is that only "sophisticated" investors with high net worths and high incomes are permitted to invest in these funds, and such investors supposedly can do the necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.

Question 7
2 out of 2 points

Which of the following is a primary market transaction?
Answer

Selected Answer: Johnson & Johnson issues 2,000,000 shares of new stock and sells them to the public through an investment banker.
Correct Answer: Johnson & Johnson issues 2,000,000 shares of new stock and sells them to the public through an investment banker.

Question 8
2 out of 2 points

Which of the following statements is CORRECT?
Answer

Selected Answer: It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole proprietorship.
Correct Answer: It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole proprietorship.

Question 9
2 out of 2 points

Which of the following items is NOT included in current assets?
Answer

Selected Answer: Bonds.
Correct Answer: Bonds.

Question 10
2 out of 2 points

Aubey Aircraft recently announced that its net income increased sharply from the previous year, yet its net cash flow from operations declined. Which of the following could explain this performance?
Answer

Selected Answer: The company's depreciation and amortization expenses declined.
Correct Answer: The company's depreciation and amortization expenses declined.

Question 11
2 out of 2 points

Which of the

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