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Multiple choice questions

Try the multiple choice questions below to test your knowledge of Chapter 2. Once you have completed the test, click on 'Submit Answers for Grading' to get your results.

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This activity contains 21 questions.

Question 1.
In finance we refer to the market for short-term government and corporate debt securities as the __________ market.


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Question 2.
Which of the following would generally have unlimited liability?


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Question 3.
The Chance Dice Corporation had taxable income (excluding capital gains) of $16 million. Under the Revenue Reconciliation Act of 1993, the firm's $10,000 of realized capital gains will be taxed at __________.


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Question 4.
A corporation in the U.S. estimates and pays it taxes __________.


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Question 5.
The average tax rate is equal to the __________.


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Question 6.
Accounting.com has purchased 3-year class equipment for $100,000. It uses the MACRS method of depreciation. What is tax depreciation for the fourth year?


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Question 7.
In finance we refer to the market where existing securities are bought and sold as the __________ market.


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Question 8.
Which of the following is not an example of a financial intermediary?


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Question 9.
How are funds allocated efficiently in a market economy?


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Question 10.
What mechanism ensures that large firms who benefit from tax laws pay some minimum amount of tax?


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Question 11.
A profitable firm would prefer to use which of the following methods of depreciation -- for tax purpose -- for a given depreciable asset, all else equal?


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Question 12.
A major disadvantage of the corporate form of organization is the __________.


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Question 13.
Which of the following examples would be deductible as an expense on the corporation's income statement?


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Question 14.
A corporation that receives $1,000 in dividends from another corporation, of which they have owned 10% for one full year, will be taxed on how much of those dividends?


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Question 15.
In finance we refer to the market where new securities are bought and sold for the first time as the __________ market.


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Question 16.

Limited liability companies (LLCs) generally possess no more than two of the following four (desirable) characteristics: (1) limited liability, (2) centralized management, (3) unlimited life, and (4) the ability to transfer ownership interest without prior consent of the other owners. The two characteristics most likely to be absent in LLCs are __________.

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Question 17.
Which of the following is an advantage of a corporation that is not an advantage as a limited partner in a partnership?


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Question 18.
Which of the following statements is correct for a sole proprietorship?


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Question 19.
What is potentially the biggest advantage of a small partnership over a sole proprietorship?


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Question 20.
In finance we refer to the market for relatively long-term financial instruments as the __________ market.


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Question 21.

Limited liability companies (LLCs) generally possess no more than two of the following four (desirable) characteristics: (1) limited liability, (2) centralized management, (3) unlimited life, and (4) the ability to transfer ownership interest without prior consent of the other owners. Which of the following forms of business organization in the U.S. generally possesses all four of these characteristics?

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