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Chapter 8 Economics Test Review Flashcards | StudBud
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Chapter 8 Economics Test Review
Chapter 8 Economics Test Review
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Answers
1
An IPO (Initial Public Offering) is
the sale of bonds to the public
the first sale of stock to the public
an offer to buy back stock
always a risky deal
2
When people buy shares of ABC Company's stock in the IPO, the money is received by
both ABC Co. and stock brokers
ABC Company
neither ABC Co. or stockbrokers
stock brokers
3
Small companies that are prospering and growing rapidly are least likely to
adding to its retained earnings
paying high dividends
selling new shares of stock
borrowing money
4
A Bull Market describes what type of market behavior?
The Dow Jones is continually rising
The Dow Jones is continually dropping
The Dow Jones goes unchanged
5
Financial institutions do which of the following?
accept savings from individuals
pay interest on savings
accept savings from businesses
6
The Securities and Exchange Commission is
a federal govt program
a federal govt agency
a theme park
a stock market
7
Which of the following is a stock market?
JA
TDCB
NYSE
CBOT
8
Which isn't true?
business saving is greater than individual savings, yearly
dividends are a form of business savings
retained earnings are $ a business saves
businesses save when they receive $ for depreciation
9
People who put savings into shares of stock
make money if they sell the shares for more than they paid
are not taking part in the nations financial markets
have made an investment with little risk
can get a return on their money only if it pays dividends
10
Which isn't true about financial markets?
they are important for the economy's growth
they are a source of income for savers
they help businesses invest in new capital resources
individual savers can seldom participate in them
11
When people buy shares of ABC Company's stock in the stock market, their money goes mostly to
ABC Company + stock brokers
Neither the company or the stock brokers
ABC company
stock brokers
12
Businesses allocate their profits to
retained earnings
employees
dividends
13
Which of the following would be the best source of info about a a company's profit?
income statement
balance sheet
it's prospectus
The SEC
14
If you own a corporate bond, you
are a creditor of the corporation
benefit only if the company earns a profit
are an investment banker
are one of the company's many owners
15
An example of a financial institution would be
department store
commercial bank
barber shop
hamburger franchise
16
Which is a true statement?
assets + liabilities = net worth
inventory = assets
assets = liabilities + net worth
net income = income before taxes
17
A Bear Market describes what type of market behavior?
The Dow Jones stays the same
The Dow Jones is continually dropping
The Dow Jones is continually rising
18
A business is most likely to use short term loans to
finance research and development
meet payroll and other expenses
build new buildings
buy new equipment
19
To determine the financial condition of a Business, it's best to study the company's ...
income statement
prospectus
balance sheets
dividend record
20
A line of credit is an
agreement with the IRS to forgive taxes owed
agreement with a business to sell products in their store
agreement with bank to borrow money up to a certain amount
