In analyzing an applicant’s creditworthiness, a credit manager typically gives primary attention to two of the five C’s of credit—collateral and condition—since they represent the most basic requirements for extending credit to an applicant. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
If a gold producer wishes to employ a non-contingent hedge, it should use a(n) (i) contract, while if it wishes to employ a contingent hedge (i.e., to hedge only down-side risk), it should use a(n) (ii) contract. (i) (ii) a. forward put option b. put option forward c. forward call option d. call option forward […]
Date: September 19th, 2020
The objective for managing accounts receivable is to avoid credit sales as much as possible. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Firms that face a __ tax rate structure have an incentive to hedge, because it can reduce the firm’s expected tax liability. a. flat b. regressive (or concave) c. decelerating d. progressive (or convex) ANSWER D
Date: September 19th, 2020
One of the key inputs to the final credit decision is a credit analyst’s subjective judgment of a firm’s creditworthiness since it can provide a better feel of a firm’s operation than any quantitative figures. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The two constructs that form a firm’s organizational architecture are: a. business architecture and economic architecture. b. economic architecture and financial architecture. c. business architecture and financial architecture. d. organizational hierarchy and financial structure. ANSWER C
Date: September 19th, 2020
The macroeconomic component of a firm’s business architecture includes all of the following elements EXCEPT: a. economic growth projections, inflation, and taxes. b. industry characteristics. c. legal environment. d. macroeconomic risk factors. ANSWER B
Date: September 19th, 2020
The General Chemical Company uses 150,000 gallons of hydrochloric acid per month. The cost of carrying the chemical in inventory is 50 cents per gallon per year, and the cost of ordering the chemical is $150 per order. The firm uses the chemical at a constant rate throughout the year. The chemical’s economic order quantity […]
Date: September 19th, 2020
In the configuration of an efficient financial system architecture, both banks and capital markets offer lending to firms. Borrowers who pose relatively onerous asset-substitution moral hazard prefer (i) financing, while borrowers who pose less serious moral hazards go directly to (ii). (i) (ii) a. capital market banks b. bank capital markets ANSWER B
Date: September 19th, 2020
A popular extension of materials requirement planning that integrates data from numerous areas such as accounting, finance, engineering, and manufacturing using a sophisticated computer system is called ________. A) computerized materials integration II B) manufacturing resource planning II C) inventory allocation planning II D) inventory integration planning II ANSWER B
Date: September 19th, 2020
