TAKE-HOME TEST:



TAKE-HOME TEST:

Mr. Syroney

Economics

Directions: All answers must be placed on the answer document. Failure to turn in the test on the date we return from Spring Break will result in a 0!

1. Which is the following is an advantage of a sole proprietorship?

a. No one is responsible if it fails

b. It is the least regulated form of business organization

c. It is easy to get financing to start one.

d. It is an easy way to make money

2. What percentage of businesses’ are sole proprietorships and approximately how much do they contribute to GDP?

a. 25%, 50%

b. 70%, 10%

c. 40%, 30%

d. 90%, 60%

3. What is the major difference between a corporation and other types of business organizations?

a. A corporation is much larger than other types of businesses

b. A corporation is not responsible for its debts if it fails

c. A corporation has a separate entity apart from that of the owners and workers

d. A corporation has officers who are responsible for the business

4. If a general partnership fails, who is responsible for the debts?

a. no one

b. anyone who works for the partnership

c. only the most senior general partnership

d. all of the partners

5. The family-owned Italian restaurant in your neighborhood is probably an example of

a. a multinational corporation

b. franchise

c. sole proprietorship

d. general partnership

6. In a publicly held corporation

a. stockholders rarely trade their stocks

b. a larger number of stockholders can buy and sell stock

c. stocks are not usually trade at stock exchanges

d. family members are excluded from holding stock

7. Good Wireless and Better Wireless merge to form Best Wireless. The federal government watches for evidence of a

a. horizontal merger

b. conglomerate

c. synergy merger

d. vertical merger

8. Dr. Ruiz shares equal responsibility and liability with her colleagues in their medical practice. Her practice is a

a. sole proprietorship

b. limited partnership

c. general partnership

d. limited liability partnership

9. Your running shoes were designed in the United States but made in Asia by a company called RunnerPro. RunnerPro is a

a. general partnership

b. trade association

c. multinational corporation

d. producer cooperative

10. You own a successful bicycle repair business. You are considering incorporating in order to

a. avoid double taxation

b. raise more money

c. avoid government regulation

d. acquire greater control in managing the business

11. You are part owner of New-Brands corporation because you

a. own the company’s stock

b. have created a corporate charter for the company

c. have purchased company’s bonds

d. attend the company’s annual meetings

12. Everyday on your way to basketball practice you wave to Mr. Martin, who owns a neighborhood flower stand. Mr. Martin’s store is probably a

a. limited partnership

b. sole proprietorship

c. small corporation

d. parent company

13. Which of the following is true of corporations?

a. They make up 40% of businesses, and contribute 50% towards GDP

b. They make up 10% of businesses, and contribute 85% towards GDP

c. They make up 2% of businesses, and contribute 60% towards GDP

d. They make up 20% of businesses, and contribute 25% towards GDP

14. The main advantage of diversification is that it

a. reduces the risk to investors

b. increases investors access to money

c. offsets the effects of inflation on investments

d. guarantees a fixed rate of return on investments

15. An accurate statement about bonds would be

a. they are insured by the FDIC

b. they are generally held for 3 to 6 months

c. they are usually a low-risk investment

d. they entitle the shareholder to a part ownership in the corporation

16. The interest rate the bond issuer pays to the bondholder is the

a. coupon rate

b. maturity rate

c. discount rate

d. value rate

17. Savings bonds differ from most other bonds in that

a. they provide a higher rate of return

b. they are held for a shorter time period

c. the buyer does not receive periodic interest payments in exchange for a lower purchase price

d. they are issued in fairly large denominations in exchange for a lower purchase price

18. An example of a blue chip stock might be

a. a new start-up firm

b. a foreign owned company that operates in another country

c. an established company that is traded on the Internet

d. a large, well-known company traded on the NYSE

19. The Dow Jones Industrial Average consists of

a. 500 different stocks that trade annually

b. 30 stocks that are considered representative of the entire market as a whole

c. the top selling 250 stocks over the last 10 years

d. 60 stocks from the NYSE, the AMEX, and the OTC market

20. When you invest in a mutual fund,

a. your money is invested in a variety of insurance policies

b. you have easier access to your money than in a savings account

c. your money is invested in a variety of stocks and bonds

d. you are guaranteed a fixed return on your investments

21. All of the following are Low-Risk investments EXCEPT

a. corporate bonds

b. treasury bills

c. money market mutual funds

d. junk bonds

22. All of the following are basic components of bonds EXCEPT

a. maturity

b. liquidity

c. par value

d. coupon rate

23. Most trades are made on the

a. New York Stock Exchange

b. The Chicago Board of Trade

c. On the NASDAQ-AMEX

d. On the OTC

24. In June, Leslie wins a cash prize of $2,000. She plans on using this prize to pay her college tuition bill in September. Leslie puts this money in a savings account because her main priority is

a. receiving the maximum amount of interest possible

b. taking a risk in the hopes of earning a high return

c. liquidity, because she will need the money in a short time

d. make a safe long term investment

25. Since bonds are considered the safest investment, you would consider them to

a. mature quickly

b. have high interest rates

c. take a long time to mature

d. have low interest rates

26. If a bond from the franchise Greens Galore has a coupon rate of 5%, a par value of $2,000, and will mature in 5 years, how much will the company have paid the holder when it retires its debt?

a. $2100, plus the original investment of $2,000

b. $200, plus the original investment of $2,000

c. $2500, plus the original investment of $2,000

d. $500, plus the original investment of $2,000

27. Karen wants to buy stock, but she is worried about the current “bear market”. This means that

a. profits from stocks are rising, making it a good time to buy

b. many investors are selling stocks in anticipation of lower profits

c. profits from stocks are falling, making it a good time to buy

d. many investors are buying stocks in anticipation of higher profits

28. The Great Crash of 1929 can be attributed to all of the following reasons EXCEPT

a. many people had gone into debt buying consumer items on credit

b. the practice of making high risk investments with borrowed money

c. the small number of people buying stock on margin

d. a relatively few companies and families held much of the nation’s wealth

29. You hear news that the DOW has fallen to 8000 points. This means that

a. the Dow is at its lowest level since the Great Depression

b. the Dow has fallen after an all-time high of 8000

c. the Dow is at relatively high levels since the 1980s, but short of its all-time highs

d. the Dow has plunged to its lowest levels in 100 years

Part Two: Read the following table and answer the questions

52

weeks | | | |

Yld | |

Vol | | | |Net

Change | |Hi |Lo |Stock |Sym |Div |% |PE |100s |Hi |Lo |Close | | |40.38 |22.50 |Disney |DIS |0.21 |.70 |40.00 |74244.00 |30.56 |29.69 |29.75 |-0.25 | |52.56 |26.94 |Dolefood |DOL |.40 |1.30 |72.00 |2927.00 |31.75 |31.38 |31.63 |0.44 | |22.75 |12.88 |DominRes |DOM |2.56 |15.80 |-- |288.00 |16.19 |15.88 |16.19 |0.13 | |16.50 |5.06 |DonnaKm |DK | |-- | |1283.00 |9.88 |8.88 |9.88 |0.88 | |22.38 |12.13 |DonnelyA |DON |.40 |2.90 |21.00 |270.00 |13.75 |13.25 |13.75 |0.56 | |136.88 |74.69 |DowChem |DOW |3.48 |2.50 |25.00 |13513.00 |138.00 |132.38 |136.94 |3.38 | |

30. According to Figure 11.1, which stock listed on the chart above increased in value the most on this trading day?

31. According to the Chart, which of the stocks listed on the chart has the highest yield to date?

32. According to the Chart, which stock would cost you the most to buy at the end of this trading day?

33. According to the Chart, which stock listed on the chart above decreased the most in value on this trading day?

According to the Chart, which of the stocks listed on the chart is the most expensive to buy?

According to the Chart, which stock does not pay a dividend?

According to the Chart, what is the number of shares of DominRes stock that were traded on this day?

According to the Chart, what is the number of DowChem shares traded on this date?

Part Three: Short Answer Questions

Dr. Stanley Hereford, a veterinarian, was the sole proprietor of his business. Unfortunately, he was fatally gored while examining a sneezing bull. What probably happened to Dr. Hereford’s business and why? (5 Points)

What are the advantages and disadvantages of a corporation? (10 Points)

What type of merger do we call between General Motors and Electronic Data Systems? (Explain why! 4 Points)

What type of merger do we call between Time Warner Cable and Turner Broadcasting that produces TNT? (Explain why! 4 Points)

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