Question 1

The value of any business is largely determined by the size of the dividend it pays its shareholders.

Accepted Answer

A) True 
 B)False

Question 2

A corporation is not

Accepted Answer

A)   a legal identity separate from shareholders
B)   eligible to issue stock as a method of acquiring capital to expand operations
C)   allowed to file for bankruptcy protection
D)   a business form allowing owners to earn income
E)   a business organization whose ownership is the same as management

Question 3

Unlimited liability explains why

Accepted Answer

A)   bondholders don't buy stock
B)   many proprietors are reluctant to expand their businesses
C)   banks are reluctant to lend money to corporations
D)   sole proprietors prefer not to incorporate
E)   many businesses go bankrupt

Question 4

One of the costs of shifting from a business form that has unlimited liability to one that has limited liability is the

Accepted Answer

A)   reduction in profit levels
B)   loss of expansion opportunity
C)   loss of a white knight
D)   loss of complete control over all aspects of the business
E)   unlimited debt potential

Question 5

One of the reasons that successful proprietors may be reluctant to borrow money from a bank to expand their business is that

Accepted Answer

A)   expanded businesses generally generate lower rates of profit
B)   the bank would become a part owner
C)   unlimited liability cramps ambition
D)   the bank's liability insurance isn't sufficient to cover expected liabilities
E)   issuing stock to finance the expansion is less costly

Question 6

Which of the following conditions is least likely to make a corporation a takeover target?

Accepted Answer

A)   high asset-to-liability ratio
B)   little stock owned by corporate management
C)   few shares owned by the corporation
D)   a nonmanagement group of owners of significant shares
E)   satisfaction with corporate earnings and direction

Question 7

Corporate management can defend itself against the threat of a hostile takeover in all of the following ways except

Accepted Answer

A)   use of shark repellent activities
B)   buying its own corporate stock
C)   acquiring considerably more debt
D)   finding a white knight
E)   keeping a large cash reserve for an emergency

Question 8

The value of a corporation typically rises when stockholders allow the corporation to reinvest its profit rather than pay out dividends.

Accepted Answer

A) True 
 B)False

Question 9

______________ elect the firm's board of directors, and ______________ appoint thefirm's management.

Accepted Answer

A)   Sole proprietors; partners
B)   Partners; sole proprietors
C)   Employees; employers
D)   Management; the board of directors
E)   Stockholders; the board of directors

Question 10

The top four U.S. multinational corporations are oil companies.

Accepted Answer

A) True 
 B)False

Question 11

The holder of a corporate bond

Accepted Answer

A)   receives a guaranteed dividend payment each year
B)   can vote at shareholder meetings
C)   can vote only for the board of directors at shareholder meetings
D)   is a part owner of the business
E)   receives, at most, a stated interest payment on the investment

Question 12

Unlimited liability applies

Accepted Answer

A)   to partnerships and sole proprietorships
B)   only to partnerships
C)   only to sole proprietorships
D)   only to corporations
E)   to corporations and partnerships

Question 13

How can corporate management defend itself against a hostile takeover attempt?

Accepted Answer

There are three strategies management ca...

Question 14

People who own preferred stock have voting privileges in the corporation.

Accepted Answer

A) True 
 B)False

Question 15

Common stock in a corporation represents a(n)

Accepted Answer

A)   loan to the business
B)   ownership interest in the business
C)   investment in the business with a guaranteed interest return
D)   investment in the business with a guaranteed profit return
E)   gift to the corporation

Question 16

The difference between a sole proprietorship and a partnership is

Accepted Answer

A)   a partnership is a separate legal being apart from its owners
B)   ability to issue stock
C)   limited liability
D)   the distribution of dividends
E)   the number of owners

Question 17

Which of the following distinguishes corporations from the other forms of business organization?

Accepted Answer

A)   Corporations can issue stock.
B)   Corporations are permitted to operate in other countries.
C)   Corporations can produce more than one product.
D)   Corporations can offer both products and services.
E)   Corporations are subject to unlimited liability.

Question 18

In a partnership form of business

Accepted Answer

A)   all, except one partner, are subject to limited liability
B)   the business must operate in at least two countries
C)   at least two different products must be produced
D)   the partner who owns the majority of stock makes all of the important managerial decisions
E)   profits are shared by the partners

Question 19

The Little Man's Ice Cream Company sells ice cream in 5 countries from its small production facility in rural Vermont. According to economic definitions, this firm should be eligible for the "multinational business of the year" award.

Accepted Answer

A) True 
 B)False

Question 20

The order of payment of corporate earnings is bondholders, preferred stockholders, convertible stockholders, and finally common stockholders.

Accepted Answer

A) True 
 B)False

Exam 7: Entrepreneurship and Business Ownership

The difference between a sole proprietorship and a partnership is

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In a partnership form of business

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The Little Man's Ice Cream Company sells ice cream in 5 countries from its small production facility in rural Vermont. According to economic definitions, this firm should be eligible for the "multinational business of the year" award.

Correct AnswerverifiedShow Answer

People who own preferred stock have voting privileges in the corporation.

Correct AnswerverifiedShow Answer

One of the costs of shifting from a business form that has unlimited liability to one that has limited liability is the

Correct AnswerverifiedShow Answer

Common stock in a corporation represents a(n)

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______________ elect the firm's board of directors, and ______________ appoint thefirm's management.

Correct AnswerverifiedShow Answer

A corporation is not

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One of the reasons that successful proprietors may be reluctant to borrow money from a bank to expand their business is that

Correct AnswerverifiedShow Answer

Which of the following distinguishes corporations from the other forms of business organization?

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The holder of a corporate bond

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How can corporate management defend itself against a hostile takeover attempt?

Correct AnswerverifiedThere are three strategies management ca...View AnswerShow Answer

Corporate management can defend itself against the threat of a hostile takeover in all of the following ways except

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The value of a corporation typically rises when stockholders allow the corporation to reinvest its profit rather than pay out dividends.

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Which of the following conditions is least likely to make a corporation a takeover target?

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The order of payment of corporate earnings is bondholders, preferred stockholders, convertible stockholders, and finally common stockholders.

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Unlimited liability applies

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Unlimited liability explains why

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The top four U.S. multinational corporations are oil companies.

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The value of any business is largely determined by the size of the dividend it pays its shareholders.

Correct AnswerverifiedShow Answer

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elect the firm's board of directors, and appoint thefirm's management.

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There are three strategies management ca...
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