For an exporter to lose money after accepting a banker’s acceptance, A) both the importer and the importer’s bank would need to default on the agreement. B) the importer would have to default on the agreement. C) the exporter would have to default on the agreement. D) the federal government would need to step into […]
Commercial paper would be considered appropriate for funding which types of corporate needs? A) the purchase of capital equipment with lives of 5 years or longer B) seasonal needs for a retail firm C) financing long-term property purchases D) all of the above ANSWER B
In what ways are preferred shares like debt and in what ways are they like common equity? What will be an ideal response? ANSWER Like debt preferred shares are paid prior to equity and expect to receive a predetermined payout that must be paid prior to common stock holders receiving any. Further, neither […]
A bank lends a firm $500,000 for one year at 8 percent and requires compensating balances of 10 percent of the face value of the loan. The effective annual interest rate associated with this loan is ________. A) 8.9 percent B) 8 percent C) 7.2 percent D) 7.0 percent ANSWER A
Compared to a line of credit, a revolving credit agreement will be ________ for a firm. A) a lower cost, higher risk method of short-term borrowing B) a lower cost, lower risk method of short-term borrowing C) a higher cost, higher risk method of short-term borrowing D) a higher cost, lower risk method of short-term […]
________ is 100 percent minus total variable operating costs as a percentage of total sales. A) Profit margin B) Contribution margin C) Expense ratio D) Fixed coverage ratio ANSWER B
Preferred shares are a form of SHORT-TERM financing available to the firm. Indicate whether the statement is true or false ANSWER FALSE
What are Michael Porter’s Five Forces that govern the competition within an industry? How do these forces impact overall growth opportunities within an industry? What will be an ideal response? ANSWER Porter Five Forces are: 1. The threat of new entrants, 2. The threat of substitute products or services, 3. The bargaining power […]
________ describes a legal state whereby a firm cannot pay its creditors A) Capital distress B) Bankruptcy C) Liquification D) Capital structure ANSWER B
Sizing up operation management involves: A) identifying the firm’s strengths and weaknesses related to operations. B) an external assessment of the industry. C) an internal assessment of the firm’s strengths and weaknesses. D) All of the above. ANSWER A