Joe Manufacturing uses 2,400 units of a product per year on a continuous basis. The product carrying costs are $60 per year and ordering costs are $250 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in […]
Date: September 19th, 2020
A firm’s credit selection procedures must be established on a sound economic basis that considers the costs of investigating the creditworthiness of a customer and the expected size of its credit purchases. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
One of the components of a cash conversion cycle is the average collection period. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm’s credit standard is a procedure for ranking an applicant’s overall credit strength, derived as a weighted average of scores on key financial and credit characteristics. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
bonds pay coupon interest in the form of additional bonds instead of cash. a. Deferred coupon b. Payment-in-kind c. Zero-coupon d. In lieu ANSWER B
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
Which of the following is NOT an element of investors’ preferences that influences a firm’s financial architecture? a. preferences for work vs. leisure b. liquidity needs c. investment horizon d. risk tolerance ANSWER A
Date: September 19th, 2020
Which of the following is NOT a valid reason for a firm to establish subsidiaries? a. to better control risk exposure of either parent-to- subsidiary or subsidiary-to-parent. b. to enhance the company’s ability to evaluate individual performance and to create different compensation systems for a diverse set of its businesses. c. to obfuscate financial reporting. […]
Date: September 19th, 2020
A _ contract is a private, tailored, bilateral agreement between two parties in which one party agrees to purchase, and the other to sell, a specified number of units of a specified asset at a given future date and at a specified price. a. swap b. forward c. futures d. warrant ANSWER B
Date: September 19th, 2020
