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
Contract devices explicitly designed to thwart a hostile takeover attempt are called poison pills or shark repellents. Examples include all of the following EXCEPT: a. a shareholder rights plan that can be issued as dividends at management’s discretion. b. an event-triggered put provision in one of the firm’s debt contracts. c. a provision in the […]
Safety stocks are extra inventories that can be drawn down when actual lead times and/or usage rates are greater than expected. Indicate whether the statement is true or false ANSWER TRUE
State legislation designed to thwart takeovers has been enacted in recent years, including _, which can delay the consummation of business combinations for years. a. business combination laws b. voting share reprisal laws c. takeover postponement laws d. control share laws ANSWER A
In the ABC system of inventory management, the two-bin method or system could be utilized to control C items. Indicate whether the statement is true or false ANSWER TRUE
In EOQ model, the average inventory is defined as the order quantity divided by 2. Indicate whether the statement is true or false ANSWER TRUE
The purchasers in a buyout often obtain financial and strategic assistance from a _ who, as a sponsor, usually finances the transaction with equity contributed by a number of investors and debt borrowed from several sources. a. buyout specialist. b. LBO intermediary c. finance company d. venture capital firm ANSWER A
In many cases a firm that has gone private via an LBO subsequently re-emerges as a publicly traded firm (via another IPO). This transaction is called a a. reprise IPO. b. resumption. c. reverse LBO. d. rollover. ANSWER C
