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Ch 10 Bus. Growth

Spalding Academy 10th Econ

QuestionAnswer
A contract promising to repay borrowed money on a designated date and pay interest along the way Bond
An asset owned by the borrower that can be sold to pay off the loan in the event that loan is not repaid Collateral
One firm combines with another firm in a different industry, such as a merger between a plastics maker and an electronics firm Conglomerate merger
The ability to borrow now based on the promise of repayment in the future Credit
A downward sloping curve showing the negative relationship between the interest rate and the quantity of loans demanded, other things constant Demand for loans curve
That portion of after-tax corporate profit paid out to shareholders Dividends
The only interest rate at which the quantity of loans demanded equals the quantity producers are willing and able to sell Equilibrium interest rate
Banks and other institutions that serve as go-betweens, accept funds from savers and lending them to borrowers Financial intermediaries
The initial sale of corporate stock to the public Initial Public Offering (IPO)
Annual interest as a percentage of the amount borrowed or saved Interest rate
An arrangement with a bank through which a business can quickly borrow needed cash Line of credit
The market that brings together borrowers and savers to determine the market interest rate Market for loans
A large corporation that makes and sells its products around the world Multinational Corporation (MNC)
The interest rate banks charge for loans to their most trustworthy business borrowers Prime rate
That portion of after-tax corporation profit reinvested in the firm Retained earnings
Corporate stock and corporate bonds Securities
An upward sloping curve showing the positive relationship between the interest rate and the quantity of loans supplied, other things constant Supply of loans curve
One firm combines with another from which it buys inputs or to which it sells output, such as a merger between a steel producer and an automaker Vertical merger
The ________ is the interest rate lenders charge the most trustworthy business borrowers. A. Collateral B. Prime rate C. Line of credit D. Dividend B.
Why do more profitable firms grow faster? A. Banks less willing to lend S to them, so they become more creative. B. More profits earned can be reinvested into the firm. C. Owners avoid investing own S into firm D. All of these choices. B.
Financial intermediaries benefit which of the following groups? A. Savers B. Borrowers C. Themselves D. All of these choices D.
In order for production to occur, savings from prior periods must exist. A. True B. False A.
Once a corporation makes a profit what can they do w/ it? A. Add to the retained earnings of the corporation. B. It may be used to buy equipment to increase its physical capital. C. It may be used to pay dividends to shareholders. D. All of these choi D.
Franchise arrangement: a parent company, or ________, contracts with another business called ____, to whom it grants the right to sell a certain product A. Contractee/contractor B. Franchisor/franchisee C. Franchisee/franchisor D. None of these choi B.
The initial public offering of a corporation allows anyone to purchase stock in the corporation. A. True B. False A.
For 1 yr you rent movies rather than going to theater. Extra $$ goes into savings. Which of the following advantages will you have enjoyed? A. Present consumption B. Interest income
 C. Immediate gratification D. Productivity growth B.
Suppose a media company merges with a company that produces cleaning products. What type of merger is this? A. Conglomerate merger B. Horizontal merger
 C. Equilibrium merger
 D. Vertical merger A.
Investing in bonds is ________ than investing in stocks A. Less predictable B. Riskier C. More profitable D. More stable D.
Why are credit card interest rates higher than interest rates for home mortgages? A. Credit card holders less likely to default B. Admin costs of credit cards higher than home mortgages. C. No collateral pledged when credit cards used. D. All of th C.
During which merger wave were conglomerate mergers the most popular? A. First Merger Wave B. Second Merger Wave C. Third Merger Wave D. Fourth Merger Wave C.
Multinational corporations are more complicated to run than domestic corporations. A. True B. False A.
High interest rates will ________ businesses to borrow money from banks. A. Discourage B. Encourage C. Not affect the decision of D. It cannot be determined from the information given. A.
Which statement accurately describes a MNC? A. Many MNCs produce products in foreign countries. B. MNCs usu serve one country. C. MNCs increases the unemployment rate in all nations. D. Prevent less-developed countries from accessing latest technolog A.
Throughout the last 15 years, which type of merger(s) occurred most frequently? A. Vertical merger B. Horizontal merger C. Conglomerate merger D. Vertical and horizontal mergers D.
Created by: rejoyce431
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