If the bidder in a hostile takeover faces target management resistance, as an alternative to either bidding higher or terminating the tender offer process, bidders sometimes offer target management compensation to end its resistance. This compensation is called: a. a golden parachute. b. a silver bullet. c. a gold watch. d. removal remuneration. […]
The literature emphasizes three motives for a buyout, including all of the following EXCEPT: a. to increase access to capital markets. b. to increase managerial incentives. c. to avert a takeover. d. to realize tax-reduction benefits. ANSWER A
Because managing inventory is just like managing any other investment, decisions about the level of inventory should be guided by the effect of inventory levels on sales. Indicate whether the statement is true or false ANSWER FALSE
The aggressive financing strategy is a ________ method while the conservative financing strategy is a ________ method. A) high-profit, high-risk; low-profit, low-risk B) high-profit, low-risk; low-profit, high-risk C) low-profit, high-risk; high-profit, low-risk D) low-profit, low-risk; high-profit, high-risk ANSWER A
In a _ merger, two firms that heretofore have been competitors in the same line of business combine. a. conglomerate b. vertical c. diagonal d. horizontal ANSWER D
A _ merger occurs between two firms that had been doing business in different stages of the production process in a given industry. a. conglomerate b. vertical c. diagonal d. horizontal ANSWER B
In economic conditions characterized by short-term interest rates which exceed long-term interest rates, the financing strategy which would maximize profits is ________ strategy. A) the aggressive B) the conservative C) the trade-off D) a seasonal ANSWER B
A firm with a very low current ratio in comparison to the industry standard could lower the risk of unavailable short-term funds by moving toward ________ financing strategy. A) the aggressive B) the conservative C) a permanent D) a seasonal ANSWER B
A firm which uses the aggressive financing strategy plans to purchase a major fixed asset financed with a loan. The most likely consequence of this action is ________. A) a decrease in the current ratio B) an increase in net working capital C) a decrease in the risk of insolvency D) an increase in long-term […]
A _ merger involves the combination of two firms in unrelated industries. a. conglomerate b. vertical c. diagonal d. horizontal ANSWER A
