1. All of the following are benefits of just-in-time inventory ordering systems EXCEPT:
a. They reduce warehouse space
b. They save utility and manpower costs
c. They reduce inventory cost
d. They prevent stock outs
2. Accounts receivable may be used as a source of financing by:
a. Pledging the receivables as loan collateral
b. Factoring the receivables to a finance company
c. Selling securities backed by the receivables
d. All of the above
3. The efficient market hypothesis has several forms. The weak form states that:
a. Past price data is unrelated to future prices
b. Prices reflect all public information
c. All information both public and private is immediately reflected in stock prices
d. None of the above
4. Which one of these conditions must be met for a lease to qualify as a capital lease?
a. The lease contains a bargain purchase price at the end of the lease
b. The lease must have a value of at least $10 million
c. The lease must have a life of 10 years
d. All of the above
5. The disadvantage of debt to the corporation include all EXCEPT which of the following?
a. Debt may have to be paid back with â??cheaperâ? dollar
b. Interest and principal payments must be met
c. Indenture agreements may place burdensome restrictions on the firm
d. Too much debt may depress the firmâ??s stock price.
6. Which of the following does NOT affect a companyâ??s dividend policy?
a. Legal rules concerning capital impairment
b. The efficient market hypothesis
c. Access to capital markets
d. Tax position of shareholders
7. The owner of a call has:
a. The right and the obligation to buy an asset at a given price
b. The right and the obligation to sell an asset at a given price
c. The right but not the obligation to buy an asset at a given price
d. The right but not the obligation to sell an asset at a given price
8. Which of the following terms is NOT specifically related to an unfriendly buyout?
a. Takeover tender offer
b. White knight
c. Saturday night special
d. Synergy
9. The following are the prices in the foreign exchange market between the U.S. dollar and another local currency (LC): Spot $0.02465/LC; 3-month forward $0.02473/LC: 6-month forward $0.02474/LC. What was the discount or premium on 3-month forward for LC?
a. 1.298% premium
b. 0.013% premium
c. 0.013% discount
d. 1.298% discount
10. Which of the following is NOT an advantage of borrowing in the Eurodollar market?
a. Greater availability of credit
b. Lower overhead costs for lending banks
c. Absence of compensating balance requirements
d. Constant lending rate over time