Gross profit=

		a. Sales Cost of goods sold
		c. Sales operating expenses
		b. Cost of goods sold - sales
		d. Operating expenses sales

Which of the following is the right statement?

c. Money market mutual funds usually invest their money in a well-diversified portfolio of liquid common stocks.

d. Money markets are markets for long-term debt and common stocks.

a. While the distinctions are becoming blurred, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties.

b. The NYSE operates as an auction market, whereas Nasdaq is an example of a dealer market.

Which of the following statements is CORRECT?

b. A corporation is a legal entity created by a state, and it has a life and existence that is separate from the lives and existence of its owners and managers.

d. Limited liability is an advantage of the corporate form of organization to its owners (stockholders), but corporations have more trouble raising money in financial markets because of the complexity of this form of organization.

a. A hostile takeover is the main method of transferring ownership interest in a corporation.

c. Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organization.

Which of the following is a primary market transaction?

a. You sell 600 shares of IBM stock on the NYSE through your broker.

d. One financial institution buys 600,000 shares of IBM stock from another institution. An investment banker arranges the transaction.

b. You buy 600 shares of IBM stock from your brother. The trade is not made through a broker--you just give him cash and he gives you the stock.

c. IBM issues 6,000,000 shares of new stock and sells them to the public through an investment banker.

hich of the following is the right statement?

		a. Compensating managers with stock options can do nothing to help eliminate potential conflicts between stockholders and managers.
		b. Restrictions can be included in credit agreements, but these restrictions can do nothing to protect bondholders from conflicts of interest between them and the firms managers and stockholders.
		c. The threat of takeovers reduces conflict of interest problems, but only between bondholders and stockholders.
		d. Compensating managers with stock options can help reduce conflicts of interest between stockholders and managers, but if the options are all exercisable on a specific date in the near future, this can motivate managers to do something other than try to maximize the stock's intrinsic value.