BUSI 1301 MIDTERM EXAM QUESTIONS WITH
VERIFIED ANSWERS
b. false - Answers - 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 - Answers - 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 - Answers - Large businesses must be organized as corporations.
a. true
b. false
a. one company purchases the property and assumes the obligations of another
company - Answers - 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 - Answers - 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 - Answers - ______ 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 - Answers - _____ 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 - Answers - _____ is an economic situation characterized by soaring
prices.
a. hyperinflation
b. deflation
c. budget surplus
d. balanced budget
b. pension fund - Answers - 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 - Answers - Low-priced retailers like Dollar Tree and Dollar General will likely see
increased sales during an economic recession.
a. true
b. false
c. profits - Answers - 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 - Answers - 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 - Answers - 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 - Answers - A strategic alliance is a partnership formed to create a competitive
advantage for the businesses involved.
a. true
b. false
b. will also rise - Answers - Other things being equal, as interest rate rises, the price of a
bond ______.
a. stays the same
b. will also rise
c. cannot be determined
d. decreases
c. vision - Answers - _____ is the ability to perceive marketplace needs and what an
organization must do to satisfy these needs.
a. critical thinking
b. social responsibility
c. vision
d. creativity
a. true - Answers - When the Fed buys government securities, it adds to the supply of
money and credit, which causes a reduction in interest rates.
a. true
b. false
a. gross domestic product - Answers - _____ is a commonly used measure of nation's
total productivity.
a. gross domestic product
b. product mix ratio
c. contribution margin
d. break-even point
d. guaranteed level of profitability - Answers - Franchising offers all of
the following advantages EXCEPT _____.
a. a recognizable company name
b. prior performance record
c. training
d. guaranteed level of profitability
d. horizontal merger - Answers - Which type of merger is done to increase customer
bases?
a. vertical merger
b. conglomerate company
c. joint venture
d. horizontal merger
VERIFIED ANSWERS
b. false - Answers - 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 - Answers - 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 - Answers - Large businesses must be organized as corporations.
a. true
b. false
a. one company purchases the property and assumes the obligations of another
company - Answers - 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 - Answers - 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 - Answers - ______ 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 - Answers - _____ 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 - Answers - _____ is an economic situation characterized by soaring
prices.
a. hyperinflation
b. deflation
c. budget surplus
d. balanced budget
b. pension fund - Answers - 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 - Answers - Low-priced retailers like Dollar Tree and Dollar General will likely see
increased sales during an economic recession.
a. true
b. false
c. profits - Answers - 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 - Answers - 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 - Answers - 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 - Answers - A strategic alliance is a partnership formed to create a competitive
advantage for the businesses involved.
a. true
b. false
b. will also rise - Answers - Other things being equal, as interest rate rises, the price of a
bond ______.
a. stays the same
b. will also rise
c. cannot be determined
d. decreases
c. vision - Answers - _____ is the ability to perceive marketplace needs and what an
organization must do to satisfy these needs.
a. critical thinking
b. social responsibility
c. vision
d. creativity
a. true - Answers - When the Fed buys government securities, it adds to the supply of
money and credit, which causes a reduction in interest rates.
a. true
b. false
a. gross domestic product - Answers - _____ is a commonly used measure of nation's
total productivity.
a. gross domestic product
b. product mix ratio
c. contribution margin
d. break-even point
d. guaranteed level of profitability - Answers - Franchising offers all of
the following advantages EXCEPT _____.
a. a recognizable company name
b. prior performance record
c. training
d. guaranteed level of profitability
d. horizontal merger - Answers - Which type of merger is done to increase customer
bases?
a. vertical merger
b. conglomerate company
c. joint venture
d. horizontal merger
