MBA 601 Final Examination and All
Correct Answers Rated A+ 2025\2026
Updated.
A share of stock entitles you to: - Answer A percentage of the earnings of the company
The cost of providing goods and services to customers is called - Answer Expenses
Benefits (i.e. money) that a company receives from its customers is called - Answer Revenue
Revenue - Expenses = - Answer Earnings, Profit, Net Income
A company must pay out the profits that it earns to the stockholders. (true/false) - Answer
FALSE
An ordinary dividend is - Answer A distribution of earnings to the shareholders
Companies that are growing quickly usually issue dividends (true/false) - Answer FALSE
You can make money investing in stocks by - Answer -Collecting Dividends
-Stock Price Appreciation
The advantage of a sole proprietorship is - Answer Complete control
The primary reason for starting a corporation is - Answer to raise a lot of capital
A corporation is its own separate legal entity. (True/False) - Answer True
In a corporation, the owner is also the manager. (True/False) - Answer False
If you are an investor in a corporation, limited liability means - Answer You are only liable for
,-Less control
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the owners,
how much tax would the federal government collect? Assume a 20% federal income tax rate
and a 15% dividend tax rate. - Answer 12,800
Pre-tax Earnings=40,000
Federal Tax 20%= 8000 [20%CORPORATE LEVEL]
Net Income=32,000 Dividend=32,000
Dividend Tax 15%=4800 [15%OWNER LEVEL]'
Net Income= 27,200
Total Tax = 12800
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the owners,
how much tax would the corporate entity pay the federal government? Assume a 20% federal
income tax rate and a 15% dividend tax rate. - Answer 8,000
Pre-tax Earnings=40,000
Federal Tax 20%=8000
[20% CORPORATE LEVEL]
Net Income= 32,000
The primary advantages of investing in stock are - Answer -unlimited upside
-voting rights
The primary advantages of investing in bonds are - Answer -Easier to value than stock
-Known payment amount
-Know when you are going to get paid
-Less risk than investing in stock
-Priority over stockholders in bankruptcy
,The advantages of issuing bonds are - Answer -Limited upside
-Financial leverage
Is it riskier for a company to issue stocks or bonds? You have to think about this one. - Answer
Bonds
Companies raise money by issuing stocks and bonds on the - Answer primary market
The first time a company issues stock to the public it is called a - Answer initial public offering
(IPO)
What type of banks help corporations raise money by issuing stocks and bonds? - Answer
Investment Bank
Which of the following are secondary markets? - Answer -New York Stock Exchange (NYSE)
-American Stock Exchange (AMEX)
-NASDAQ
You should believe anything you read from sell-side analysts. (True/False) - Answer False
Why do companies care about their stock price on the secondary market? - Answer It will
affect them if they need issue more stock
When you buy a stock you are typically buying it - Answer On a secondary stock exchange
The largest stock exchanges in the world are located in - Answer United States
What is the future value of $500 dollars today 1 year from now? Assume a risk-free rate of 6%. -
Answer 530
FV= PV + (PV x i)
= 500 + (500 x 0.06)
, PV = FV / (1 + i)
= 2,220 / (1 + 0.05)
Which of the following will give you the present value of a future amount discounted 1 year? -
Answer FV / (1+i)
Assuming a discount rate of 9% choice is better:
Choice A: $500 today
Choice B: $540 1 year from now. - Answer Choice A
Choice A:
Today- $500
1 Year- $545
Choice B:
Today- $495.41
1 Year- $540
Assuming a discount rate of 4% choice is better:
Choice A: $500 today
Choice B: $540 1 year from now. - Answer Choice B
Choice A:
Today- $500
1 Year- $520
Choice B:
Today- $519.23
1 Year- $540
Assuming a 6% discount rate which choice is better:
Correct Answers Rated A+ 2025\2026
Updated.
A share of stock entitles you to: - Answer A percentage of the earnings of the company
The cost of providing goods and services to customers is called - Answer Expenses
Benefits (i.e. money) that a company receives from its customers is called - Answer Revenue
Revenue - Expenses = - Answer Earnings, Profit, Net Income
A company must pay out the profits that it earns to the stockholders. (true/false) - Answer
FALSE
An ordinary dividend is - Answer A distribution of earnings to the shareholders
Companies that are growing quickly usually issue dividends (true/false) - Answer FALSE
You can make money investing in stocks by - Answer -Collecting Dividends
-Stock Price Appreciation
The advantage of a sole proprietorship is - Answer Complete control
The primary reason for starting a corporation is - Answer to raise a lot of capital
A corporation is its own separate legal entity. (True/False) - Answer True
In a corporation, the owner is also the manager. (True/False) - Answer False
If you are an investor in a corporation, limited liability means - Answer You are only liable for
,-Less control
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the owners,
how much tax would the federal government collect? Assume a 20% federal income tax rate
and a 15% dividend tax rate. - Answer 12,800
Pre-tax Earnings=40,000
Federal Tax 20%= 8000 [20%CORPORATE LEVEL]
Net Income=32,000 Dividend=32,000
Dividend Tax 15%=4800 [15%OWNER LEVEL]'
Net Income= 27,200
Total Tax = 12800
If a corporation had earnings of $40,000 and paid all of this out as a dividend to the owners,
how much tax would the corporate entity pay the federal government? Assume a 20% federal
income tax rate and a 15% dividend tax rate. - Answer 8,000
Pre-tax Earnings=40,000
Federal Tax 20%=8000
[20% CORPORATE LEVEL]
Net Income= 32,000
The primary advantages of investing in stock are - Answer -unlimited upside
-voting rights
The primary advantages of investing in bonds are - Answer -Easier to value than stock
-Known payment amount
-Know when you are going to get paid
-Less risk than investing in stock
-Priority over stockholders in bankruptcy
,The advantages of issuing bonds are - Answer -Limited upside
-Financial leverage
Is it riskier for a company to issue stocks or bonds? You have to think about this one. - Answer
Bonds
Companies raise money by issuing stocks and bonds on the - Answer primary market
The first time a company issues stock to the public it is called a - Answer initial public offering
(IPO)
What type of banks help corporations raise money by issuing stocks and bonds? - Answer
Investment Bank
Which of the following are secondary markets? - Answer -New York Stock Exchange (NYSE)
-American Stock Exchange (AMEX)
-NASDAQ
You should believe anything you read from sell-side analysts. (True/False) - Answer False
Why do companies care about their stock price on the secondary market? - Answer It will
affect them if they need issue more stock
When you buy a stock you are typically buying it - Answer On a secondary stock exchange
The largest stock exchanges in the world are located in - Answer United States
What is the future value of $500 dollars today 1 year from now? Assume a risk-free rate of 6%. -
Answer 530
FV= PV + (PV x i)
= 500 + (500 x 0.06)
, PV = FV / (1 + i)
= 2,220 / (1 + 0.05)
Which of the following will give you the present value of a future amount discounted 1 year? -
Answer FV / (1+i)
Assuming a discount rate of 9% choice is better:
Choice A: $500 today
Choice B: $540 1 year from now. - Answer Choice A
Choice A:
Today- $500
1 Year- $545
Choice B:
Today- $495.41
1 Year- $540
Assuming a discount rate of 4% choice is better:
Choice A: $500 today
Choice B: $540 1 year from now. - Answer Choice B
Choice A:
Today- $500
1 Year- $520
Choice B:
Today- $519.23
1 Year- $540
Assuming a 6% discount rate which choice is better:
