1. Helping money flow from individuals who want to improve their financial future to businesses that want to expand the scale or scope of their operations relies on the successful application of
A. the time value of money (TVM).
B. financial theories.
C. financial management.
D. economies of scale.
2. A merger that involves combining a firm with a supplier or distributer is known as a _______ merger.
A. horizontal
B. vertical
C. conglomerate
D. market extension
3. Sally's Diamonds, with total costs of $3,000,000 and sales of $4,000,000, is merging with Juan's Diamonds, which has total costs of $2,000,000 and sales of $3,000,000. What percent would the average costs be for the combined entity?
A. 68.41 percent
B. 71.43 percent
C. 76.25 percent
D. 73 percent
4. Carl's Tires is planning to merge with Joe's Body Shop to offer a combined auto repair service shop. Carl's Tires has total costs of $1,500,000 and sales of $2,000,000, while Joe's Body Shop features costs of $2,200,000 and sales of $4,000,000. The combined firms will be able to achieve economies of scope sufficient to reduce costs by $400,000 while maintaining sales at current levels. Calculate the difference between the percentage values of the average costs of the merged firms and the combined average costs of two nearby competitors. These competitors continue to sell tires and do auto repair separately, having total costs of $2,000,000 and sales of $2,500,000, $2,400,000, and $3,200,000, respectively.
A. 23.56 percent
B. 28.45 percent
C. 34 percent
D. 22.19 percent
5. What's the bankruptcy-risk categorization of a firm with a 1.8 Z-score?
A. Low
B. High
C. Very low
D. Indeterminate
6. _______ was/were one of the causes of the financial crisis that peaked in the fall of 2008.
A. Double taxation
B. Defaults by subprime mortgage borrowers
C. The American Recovery and Reinvestment Act
D. The Sarbanes-Oxley Act