Managing the firm’s supply network is important because: A) the firm is reliant on the efforts of its supply network partners in order to produce its products and/or services. B) managers must manage the supply network for efficient, responsive procurement and distribution to meet their customers’ needs. C) plant or facilities management involves ensuring sufficient […]
A firm arranged for a 120-day bank loan at an annual rate of interest of 10 percent. If the loan is for $100,000, how much interest in dollars will the firm pay? (Assume a 360-day year.) A) $10,000 B) $30,000 C) $3,333 D) $1,000 ANSWER C
Your author describes an aspect of the 2007-2009 financial crisis concerning commercial paper and a financial instrument he refers to as an ABCP. Define an ABCP and the role it played in the financial crisis. What will be an ideal response? ANSWER The ABCP, or asset backed commercial paper market, consists of commercial […]
Rank the order of standard deviation of returns from highest to lowest for the following classes of U.S. securities for the time period 1926 – 2011. A) small stocks, large stocks, 30-year Treasury bonds, and 90-day T-bills B) large stocks, small stocks, 30-year Treasury bonds, and 90-day T-bills C) 90 -day T-bills, large stocks, 30-year […]
The major real-world benefit of debt is that interest payments are a tax-deductible expense. Indicate whether the statement is true or false ANSWER TRUE
A publicly traded firm just announced that its issuing debt to finance a new project. Which of the following scenarios is most likely TRUE in a market with asymmetric information? A) The firm’s future prospects look good and they are sending a costly signal that indicates they will be able to meet higher debt obligations. […]
Mark must buy four new tires for his car. He is considering buying tires that are $25 a piece more than his regular brand, because the higher priced tires are supposed to increase his miles per gallon by 20%. If the tires are good for 48,000 miles and Mark drives an average of 1,000 miles […]
Under U.S. Bankruptcy code, claims against the firm are prioritized along the lines of secured creditors followed in order by: A) preferred stock holders, common stock holders, and then unsecured creditors after all others have been compensated. B) unsecured creditors, preferred stock holders, and then common stock holders after all others have been compensated. C) […]
Which of the following statements is most accurate in the M&M world including taxes and financial distress? A) Overall market value of the firm = market value of all-equity firm – value of interest tax shield — costs of financial distress B) Overall market value of the firm = market value of all-equity firm + […]
One definition of LIBOR, is that it is the rate at which banks can borrow from one another. Indicate whether the statement is true or false ANSWER TRUE
