Which of the following statements is FALSE?
A) As long as investors can borrow or lend at the same interest rate as a firm, homemade leverage is a perfect substitute for the use of leverage by the firm.
B) When investors use leverage in their own portfolios to adjust the leverage choice made by a firm, we say that they are using homemade leverage.
C) The value of a firm is determined by the present value (PV) of the cash flows from its current and future investments.
D) The investor can re-create the payoffs of unlevered equity by borrowing and using the proceeds to purchase the equity of a firm.
Answer: D
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A large athletic shoe company has agreed to work with a smaller company that has a new line of athletic clothing since the bigger firm does not have a similar offering and the smaller firm has limited experience in marketing and distribution. The two firms could be described as
a. union partners. b. strategic allies. c. distributors. d. special interests. e. regulatory institutions.
Which of the following would organizational citizenship behavior involve?
a. low loyalty to a specific leader b. conformist behavior c. helping coworker or others who might be struggling d. assuming accountability
Which of the following statements is TRUE of absorption and variable costing methods?
A) Both costing methods consider selling and administrative costs to be period costs. B) Variable costing considers variable selling and administrative costs to be product costs. C) Absorption costing considers fixed manufacturing overhead to be period costs. D) Both costing methods consider fixed manufacturing overhead to be product costs.
Define joint cost. Should joint costs be considered in the decision to sell or further process the product? Explain your answer.
What will be an ideal response?