BUSI 1301 Midterm Exam Review
Practice Test.
b. false - CORRECT ANSWER Just as with a for-profit business, the first priority for a not-for-profit
organization is making a profit.
a. true
b. false
c. capitalism - CORRECT ANSWER In his book The Wealth of Nations, the economist Adam Smith was the
first person to describe _____.
a. socialism
b. communism
c. capitalism
d. entrepreneurship
b. false - CORRECT ANSWER Large businesses must be organized as corporations.
a. true
b. false
a. one company purchases the property and assumes the obligations of another company - CORRECT
ANSWER An acquisition occurs when _____.
a. one company purchases the property and assumes the obligations of another company
b. one corporation owns 8% of the stock of another corporation
c. owners of small companies band together to operate their businesses collectively
d. two or more firms combine to form a single company
a. discount rate - CORRECT ANSWER The rate the Fed charges member banks for short-term loans is
called the __________.
a. discount rate
b. margin rate
,c. federal funds rate
d. reserve requirement
b. bondholders - CORRECT ANSWER ______ are creditors (an entity to whom a debt is owed) of a
corporation or government body.
a. commercial paper holders
b. bondholders
c. treasury bills holders
d. certificate of deposit holders
b. profits - CORRECT ANSWER _____ are essential because it serves as a primary incentive for people to
start companies, expand them, and provide consistently high-quality competitive goods and services.
a. coupons
b. profits
c. discounts
d. rebates
a. hyperinflation - CORRECT ANSWER _____ is an economic situation characterized by soaring prices.
a. hyperinflation
b. deflation
c. budget surplus
d. balanced budget
b. pension fund - CORRECT ANSWER Which of the following financial institutions would invest the
greatest percentage of its assets in common stocks and other long-term investments?
a. commercial bank
b. pension fund
c. credit union
d. property and liability insurance company
, a. true - CORRECT ANSWER Low-priced retailers like Dollar Tree and Dollar General will likely see
increased sales during an economic recession.
a. true
b. false
c. profits - CORRECT ANSWER In the U.S. economy, _____ are considered the reward for the risk of
entering a business.
a. revenues
b. concessions
c. profits
d. sales
d. balance sheet - CORRECT ANSWER Which of the following financial statements shows a company's
financial position on a particular date?
a. statement of changes in retained earnings
b. income statement
c. statement of cash flows
d. balance sheet
a. true - CORRECT ANSWER When customers enter a supermarket and select their favorite brand of
laundry detergent, they are exercising their right to freedom of choice.
a. true
b. false
a. true - CORRECT ANSWER A strategic alliance is a partnership formed to create a competitive
advantage for the businesses involved.
a. true
b. false
b. will also rise - CORRECT ANSWER Other things being equal, as interest rate rises, the price of a bond
______.
Practice Test.
b. false - CORRECT ANSWER Just as with a for-profit business, the first priority for a not-for-profit
organization is making a profit.
a. true
b. false
c. capitalism - CORRECT ANSWER In his book The Wealth of Nations, the economist Adam Smith was the
first person to describe _____.
a. socialism
b. communism
c. capitalism
d. entrepreneurship
b. false - CORRECT ANSWER Large businesses must be organized as corporations.
a. true
b. false
a. one company purchases the property and assumes the obligations of another company - CORRECT
ANSWER An acquisition occurs when _____.
a. one company purchases the property and assumes the obligations of another company
b. one corporation owns 8% of the stock of another corporation
c. owners of small companies band together to operate their businesses collectively
d. two or more firms combine to form a single company
a. discount rate - CORRECT ANSWER The rate the Fed charges member banks for short-term loans is
called the __________.
a. discount rate
b. margin rate
,c. federal funds rate
d. reserve requirement
b. bondholders - CORRECT ANSWER ______ are creditors (an entity to whom a debt is owed) of a
corporation or government body.
a. commercial paper holders
b. bondholders
c. treasury bills holders
d. certificate of deposit holders
b. profits - CORRECT ANSWER _____ are essential because it serves as a primary incentive for people to
start companies, expand them, and provide consistently high-quality competitive goods and services.
a. coupons
b. profits
c. discounts
d. rebates
a. hyperinflation - CORRECT ANSWER _____ is an economic situation characterized by soaring prices.
a. hyperinflation
b. deflation
c. budget surplus
d. balanced budget
b. pension fund - CORRECT ANSWER Which of the following financial institutions would invest the
greatest percentage of its assets in common stocks and other long-term investments?
a. commercial bank
b. pension fund
c. credit union
d. property and liability insurance company
, a. true - CORRECT ANSWER Low-priced retailers like Dollar Tree and Dollar General will likely see
increased sales during an economic recession.
a. true
b. false
c. profits - CORRECT ANSWER In the U.S. economy, _____ are considered the reward for the risk of
entering a business.
a. revenues
b. concessions
c. profits
d. sales
d. balance sheet - CORRECT ANSWER Which of the following financial statements shows a company's
financial position on a particular date?
a. statement of changes in retained earnings
b. income statement
c. statement of cash flows
d. balance sheet
a. true - CORRECT ANSWER When customers enter a supermarket and select their favorite brand of
laundry detergent, they are exercising their right to freedom of choice.
a. true
b. false
a. true - CORRECT ANSWER A strategic alliance is a partnership formed to create a competitive
advantage for the businesses involved.
a. true
b. false
b. will also rise - CORRECT ANSWER Other things being equal, as interest rate rises, the price of a bond
______.
