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
Harry’s Sheds has ten different items in its finished goods inventory. The average number of units held in inventory and the average unit cost are listed for each item. The firm uses an ABC system of inventory control. (a) Which items should be considered to be in the A category of an ABC system of […]
Date: September 19th, 2020
Taizhou Products uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days […]
Date: September 19th, 2020
The economic order quantity (EOQ) is the order quantity which minimizes ________. A) the order cost per order B) the total inventory costs C) the carrying costs per unit per period D) order quantity in units ANSWER B
Date: September 19th, 2020
Debt restructuring is generally accomplished via a combination of (i) and (ii). (i) (ii) a. default forgiveness b. consolidation exit (of some creditors) c. forgiveness ex post regret d. exchange offers coercion ANSWER D
Date: September 19th, 2020
The total cost of a firm’s inventory is found by summing the ________. A) order cost and the marginal cost of a firm’s inventory B) order cost and the carrying cost of a firm’s inventory C) order cost and the actual cost of a firm’s inventory D) carrying cost and the marginal cost of a […]
Date: September 19th, 2020
According to signaling theory, Chapter 11 is a useful mechanism for screening inefficient firms out of debt renegotiation. Inefficient firms voluntarily choose Chapter 11 because: a. the firm can be liquidated more quickly. b. negotiations therein generally result in some value retained by shareholders. c. creditors are protected from violations of the absolute priority rule […]
Date: September 19th, 2020
Which of the following is an example of carrying cost? A) insurance of goods in transit B) transportation cost C) insurance cost D) cost of inventory ANSWER C
Date: September 19th, 2020
