Which of the following is NOT a valid reason for a firm to establish subsidiaries? a. to better control risk exposure of either parent-to- subsidiary or subsidiary-to-parent. b. to enhance the company’s ability to evaluate individual performance and to create different compensation systems for a diverse set of its businesses. c. to obfuscate financial reporting. […]
A _ contract is a private, tailored, bilateral agreement between two parties in which one party agrees to purchase, and the other to sell, a specified number of units of a specified asset at a given future date and at a specified price. a. swap b. forward c. futures d. warrant ANSWER B
Harry’s Sheds has ten different items in its finished goods inventory. The average number of units held in inventory and the average unit cost are listed for each item. The firm uses an ABC system of inventory control. (a) Which items should be considered to be in the A category of an ABC system of […]
Taizhou Products uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days […]
TRUE or FALSE: In Chapter 11 proceedings, the court almost always strictly adheres to the Absolute Priority Rule (APR). a. TRUE b. FALSE ANSWER B
Futures trading features daily _(i)_ in cash and _(ii)_. _(i)_ _(ii)_ a. closing marking-to-market b. resettlement closing c. resettlement marking-to-market d. swapping marking-to-market. ANSWER C
In a, the claimants have already worked out the terms of the reorganization, and basically file just to make the agreement official. a. perfunctory filing b. token filing c. prepackaged bankruptcy d. gesture filing ANSWER C
Jia’s Apple Farm uses 12,600 baskets a year for apple shipment. Determine the optimum order quantity of baskets assuming the order costs per order is $600 and it costs $2 to carry a unit of basket in inventory per period. What will be an ideal response? ANSWER EOQ = = 2,750 units
In complete voluntary liquidations, the sum of the firm’s parts is worth more than the whole, for all of the following reasons EXCEPT: a. the assets (or divisions) may be worth more in the hands of more competent managers. b. liquidated assets always sell at a premium to their fair value. c. the special tax […]
A swap contract is in essence a portfolio, or series, of a. forward contracts. b. futures contracts. c. repurchase agreements. d. resettlement agreements. ANSWER A
