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Which of the following is not an example of mismanagement

Which of the following is not an example of mismanagement?

a.oil price increases

b.overexpansion

c.ineffective sales force

d.poor financial actions

 

 

 

48.Financial distress

a.always leads to bankruptcy.

b.imposes direct and indirect costs on the firm.

c.has no effect on the firm’s customers.

d.all of the above.

 

 

 

49.In a Chapter 11 setting, a firm

a.must be liquidated.

b.can be reorganized, but only if all creditors unanimously agree to the plan.

c.may have the terms of its debt relaxed.

d.none of the above.

 

 

 

50.Suppose a firm’s creditors decide that replacing current management is a requirement in a voluntary reorganization. This is called

a.an extension reorganization.

b.a composition reorganization.

c.a creditor control reorganization.

d.a cram-down reorganization.

 

 

 

51.The legal mechanism by which inefficient firms may leave the market is

a.economic darwinism.

b.bankruptcy.

c.liquidation.

d.none of the above.

 

 

 

52.Economic failure occurs when

a.a firm fails to earn a return that is greater than its cost of debt.

b.a firm fails to earn a return that is greater than its cost of equity capital.

c.a firm fails to earn a return that is greater than its cost of capital.

d.both a and c.

 

 

 

53.When a firm’s liabilities exceed the fair market value of its assets the firm

a.is insolvency bankrupt.

b.is in default.

c.is in a liquidity crisis.

d.none of the above.

 

 

 

54.A modern day buggy whip maker that went out of business because of low sales really failed because of

a.its corporate maturity.

b.its inability to control the business cycle.

c.an aggressive capital structure.

d.none of the above.

 

 

 

55.If an auto maker were to fail in an economic downturn then it would fail due to

a.economic activity.

b.corporate maturity.

c.an overly conservative capital structure.

d.none of the above.

 

 

 

56.If a firm is technically insolvent then the firm may arrange

a.a workout.

b.a voluntary settlement.

c.both (a) and (b)

d.none of the above

Feb 13 2020 View more View Less

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