For a corporate borrower, it is especially important to distinguish between credit risk and repricing risk. Explain both types of risks
What will be an ideal response?
Answer: Credit risk, sometimes termed roll-over risk, is the possibility that a borrower's creditworthiness at the time of renewing a credit — its credit rating — is reclassified by the lender. This can result in changing fees, changing interest rates, altered credit line commitments, or even denial. Repricing risk is the risk of changes in interest rates charged (earned) at the time a financial contract's rate is reset. A borrower that is renewing a credit will face current market conditions on the base rate used for financing, a true floating-rate.
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A sound justification for unrelated diversification is that
A. doing so can support managerial motives including the prospects for higher compensation B. doing so can meet expectations for rapid or continuous growth C. doing so can result in risk reduction by spreading a company's investments over a set of diverse industries D. doing so can stabilize earnings, i.e., market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses E. doing so can deliver enhanced shareholder value if an undervalued company can be purchased at a bargain price
Acme, Inc., produces widgets. To manufacture a new type of widget, it took 45 hours for the first widget. Acme estimates it has a 92% learning rate. Using the logarithmic approach, calculate the time it will take to manufacture the 22nd widget.
a. 31.05 hours b. 28.22 hours c. 18.96 hours d. 42.87 hours
Answer the following statement(s) true (T) or false (F)
A champion is a person with a big ego who just gets in the way of corporate entrepreneurship.
Routers usually are connected in a ________ topology
A) point-to-point B) mesh C) hierarchical D) bus