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 […]
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
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
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
In a takeover bid, target management may offer to repurchase the bidder’s shares at a large premium if the bidder promises to cease and desist. The premium payoff is called (i), and the agreement to cease and desist is called a (ii). (i) (ii) a. subornation stand down agreement b. subornation standstill agreement c. greenmail […]
TRUE or FALSE. Agency costs of managerial discretion are one of the few costs that are not exacerbated when a firm is under financial distress. a. TRUE b. FALSE ANSWER B
The ABC system is an inventory management technique for determining the optimal order quantity for an item of inventory. Indicate whether the statement is true or false ANSWER FALSE
If one firm in a given industry declares bankruptcy, the market may lower the values of other firms in a given industry because the reveals new, negative information about the status of the industry as a whole. This phenomenon is called: a. the contagion effect. b. the intra-industry wealth transfer effect. c. irrational behavior. d. […]
The reorder point is the point at which a firm receives orders. Indicate whether the statement is true or false ANSWER FALSE
Since its objective is to minimize inventory investment, a Just-in-Time (JIT) system uses no, or very little, safety stocks. Indicate whether the statement is true or false ANSWER TRUE
