In a(n) _, the parent of a multiple-subsidiary firm issues, via an IPO, equity shares for a particular subsidiary, though the parent usually keeps majority ownership of the shares, and thus control of the subsidiary. a. asset sale b. spin-off c. equity carve-out d. targeted stock issuance ANSWER C
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
In the EOQ model, if carrying costs increase while all other costs remain unchanged, the number of orders placed would be expected to increase. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Bankruptcy risk plays a role in the propagation of recessions by: a. causing a backlog in the caseloads of bankruptcy courts. b. causing firms to increase capital expenditures as the economy begins to slow. c. forcing firms to pay down debt. d. straining the liquidity positions of both individuals and firms, both of which try […]
Date: September 19th, 2020
When the Federal Reserve Board’s open market committee buys T-bills, it is pursuing a. contractionary monetary policy. b. expansionary monetary policy. c. fiscal discipline. d. a policy of balancing the federal budget. ANSWER B
Date: September 19th, 2020
In the EOQ model, the total cost is minimized at the point where the order costs and carrying costs are equal. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The reorder point is an inventory management system that compares production needs to available inventory balances and determines when orders should be placed for various items on a firm’s bill of materials. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
