In a __ the bidder’s intention is to acquire the target and replace the target’s incumbent management, who vigorously resist the attempt. a. merger b. acquisition c. buyout d. hostile takeover ANSWER D
Date: September 19th, 2020
A __ occurs when a group of individuals uses cash to purchase the shares of a firm and takes ownership and control of the firm. a. buyout b. acquisition c. consolidation d. merger ANSWER A
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
How does Jensen’s free cash flow hypothesis relate to a firm’s dividend policy? a. Dividends discipline management by forcing free cash flow to be disgorged to shareholders, thus mitigating management’s tendency to engage in empire building. b. Dividends act as a signal of firm value. c. Dividends solve the principal-agent problem between shareholders and creditors. […]
Date: September 19th, 2020
The aggressive financing strategy is risky in two aspects: a firm operates with a possibility of ________, and a firm has only a limited amount of ________ capacity. A) insolvency; short-term borrowing B) interest rate swings; short-term borrowing C) low earnings; long-term borrowing D) fixed interest rate; long-term borrowing ANSWER B
Date: September 19th, 2020
A decrease in the production time to manufacture a finished good will result in ________. A) an increase in the average age of inventory B) a decrease in the cash conversion cycle C) an increase in the cash conversion cycle D) a decrease in the average age of inventory ANSWER B
Date: September 19th, 2020
