TRUE or FALSE: Among publicly traded U.S. nonfinancial firms, most bankruptcy announcements are complete surprises to the market, as indicated by the fact that, for over 90% of such firms, their announcement-month market equity value (MEQ) is at least as high as their MEQ at month –12 relative to the announcement. a. TRUE b. FALSE […]
According to which hypothesis below, the market generally reacts favorably to an asset sale because such sales promote efficiency by allocating assets to better uses. a. the financing hypothesis of asset sales b. the efficient deployment hypothesis c. the information hypothesis d. the fire-sales hypothesis ANSWER B
A popular extension of materials requirement planning is inventory integration automation II, which integrates data from numerous areas such as finance, accounting, marketing, engineering, and manufacturing using a sophisticated computer system. Indicate whether the statement is true or false ANSWER FALSE
In a dual-class recapitalization (or ‘recap’), a firm a. creates two classes of managers—operational and financial. b. establishes two classes of securities—debt and equity. c. establishes two classes of debt securities—senior and subordinated. d. creates a second class of common stock that has limited voting rights and generally a preferential claim to the firm’s cash […]
Which of the following is true of inventory level? A) A purchasing manager would purchase higher inventories when prices are low and lower inventories when prices are high irrespective of inventory requirement. B) A marketing manager would like to have smaller inventories of finished products to ensure production of goods as per customer specification. C) […]
Which of the following is true of maintaining appropriate inventory levels? A) A financial manager’s general disposition toward inventory levels is to keep them low. B) A marketing manager would like to have low inventories of a firm’s finished products. C) A manufacturing manager would keep raw materials inventories low for the sake of lower […]
Targeted stock, also known as tracking stock or letter stock, is a class of common stock of a diversified company that is a. linked to the performance of a particular business unit or division. b. senior to other classes of the firm’s common stock. c. convertible into the stock of an independent target company. d. […]
In an equity carve-out, the parent of a multiple-subsidiary firm issues equity claims against a particular subsidiary via a a. private placement. b. pro-rata distribution to the parent’s current stockholders. c. public offering. d. unit distribution. ANSWER C
When maintaining appropriate inventory level, a purchasing manager should ________. A) keep the inventory level low, to ensure that the firm’s money is not being unwisely invested in excess resources B) ensure that all orders could be filled quickly, eliminating the need for backorders due to stockouts C) implement the production plan to acquire the […]
A spin-off is a a. pro-rata distribution of new equity claims on a subsidiary to the parent’s shareholders. b. sale of a division for cash to another firm. c. tax-driven sale of depreciation rights to another firm. d. sale of patent rights (e.g., for a pharmaceutical drug) to another firm. ANSWER A
