4. Which of the following is a risk of large-scale government borrowing?
A. A GDP loss

B. Lower interest rates

C. Higher prices and interest rates

D. Lower employment

Student Answer: A
Answer: Incorrect
Reference: Section 3.6

5. A merger between a company and one of its suppliers is known as a _______ merger.
A. supply

B. vertical

C. demand

D. horizontal

Student Answer: A
Answer: Incorrect
Reference: Section 3.4

8. One advantage of preferred stock over common stock is that preferred stockholders
A. get a cheaper price on stock.
B. are entitled to a fixed dividend.
C. have the right to vote for the board of directors.
D. participate in managing the company.
Student Answer: C
Answer: Incorrect
Reference: Section 3.2

17. A characteristic of a natural monopoly is that
A. adding businesses in competition would increase cost to the consumer.

B. the firm is dedicated to the use of natural resources.

C. there's no government intervention in the market.

D. the firm is supported by the consumer and voted into existence by the voters.

Student Answer: B
Answer: Incorrect
Reference: Section 3.5

18. Which of the following is an advantage of investing in a mutual fund?
A. No risk
B. Guaranteed profit

C. Professional management

D. Investments are made in only one company

Student Answer: D
Answer: Incorrect
Reference: Section 3.2

20. What's the term for the profit made from selling a stock at a higher price than the price paid for the stock?
A. Capital gail

B. Depreciation

C. Stock profit

D. Dividend

Student Answer: C
Answer: Incorrect
Reference: Section 3.2