Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Banking
Q:
Following the subprime collapse, the spread (difference) between the interest rates on Baa bonds and Treasury bonds widened.
Q:
What options to outright acquisition did BofA have? Why do you believe BofA chose to acquire Countrywide rather than to pursue an alternative strategy?
Q:
What capabilities did the acquisition of FleetBoston Financial and MBNA provide BofA? How did the Countrywide acquisition complement previous acquisitions?
Q:
The risk structure of interest rates describes the relationship between the interest rates of different bonds with the same maturities.
Q:
Describe what the likely objectives of the BofA acquisition plan might have been. Be specific. What are the key assumptions implicit in BofAs acquisition plan? What are some of the key risks associated with integrating the Countrywide? In addition to the purchase price, how would you determine BofAs potential resource commitment in making this acquisition?
Q:
The term structure of interest rates describes how interest rates move over time.
Q:
If a bond has a favorable tax treatment, its required interest rate (all else equal)
A) will be higher.
B) will not be affected.
C) will be lower.
D) all of the above could happen.
Q:
How would you classify the BofA business strategy (cost leadership, differentiation, focus or some combination)? Explain your answer.
Q:
How did the acquisition of Countrywide fit BofAs business strategy? Be specific. What were the key assumptions implicit the BofAs business strategy? How did the existence of BofAs mission and business strategy help the firm move quickly in acquiring Countrywide?
Q:
________ are investment advisory firms that rate the quality of corporate and municipal bonds in terms of probability of default.
A) Financial institutions
B) Credit-rating agencies
C) Securities companies
D) none of the above
Q:
The ________ theory is the most widely accepted theory of the term structure of interest rates because it explains the major empirical facts about the term structure so well.
A) liquidity premium
B) market segmentation
C) expectations
D) none of the above
Q:
How would you characterize the HP strategy for mobility products (cost leadership, differentiation, focus, or a hybrid) and why?
Q:
The risk structure of interest rates is explained by
A) default risk.
B) liquidity.
C) tax considerations.
D) all of the above.
Q:
To what extent could the acquisition of Palm by HP be viewed as a make versus buy decision by HP?
Q:
In what way do you think the Oracle strategy was targeting key competitors? Be specific.
Q:
________ bonds are exempt from federal income taxes.
A) Corporate Aaa
B) U.S. Treasury
C) Corporate Baa
D) Municipal
Q:
Conduct an external and internal analysis of Oracle. Briefly describe those factors that influenced the development of Oracles business strategy. Be specific.
Q:
________ bonds are the most liquid of all long-term bonds.
A) Callable
B) Municipal
C) Corporate Aaa
D) U.S. Treasury
Q:
What other benefits for Oracle, and for the remaining competitors such as SAP, do you see from further industry consolidation? Be specific.
Q:
A bond rating of Aa or AA would mean that the quality of the bond is
A) the highest.
B) high.
C) medium grade.
D) speculative.
Q:
How would you characterize the Oracle business strategy (i.e., cost leadership, differentiation, niche, or some combination of all three)? Explain your answer.
Q:
A steep upward-sloping yield curve indicates that short-term interest rates are expected to
A) neither rise nor fall in the near future.
B) remain relatively unchanged, but that long-term rates are expected to fall.
C) neither rise nor fall, but that long-term rates are expected to rise moderately.
D) rise moderately in the near future.
Q:
Why might the acquisition of Qwest be described as defensive?
Q:
A moderately upward-sloping yield curve indicates that short-term interest rates are expected to
A) neither rise nor fall in the near future.
B) remain relatively unchanged, but that long-term rates are expected to fall.
C) neither rise nor fall, but that long-term rates are expected to rise moderately.
D) rise moderately in the near future.
Q:
Describe the key factors both external and internal to the firm that you believe are driving this strategy.
Q:
Of the four theories that explain how interest rates on bonds with different terms to maturity are related, the one that assumes that bonds of different maturities are not substitutes for one another is the
A) expectations theory.
B) segmented markets theory.
C) liquidity premium theory.
D) preferred habitat theory.
Q:
How would you describe CenturyTels business strategy? Be specific.
Q:
Of the four theories that explain how interest rates on bonds with different terms to maturity are related, the one that views long-term interest rates as equaling the average of future short-term rates expected to occur over the life of the bond is the
A) pure expectations theory.
B) preferred habitat theory.
C) liquidity premium theory.
D) segmented markets theory.
Q:
Do you believe the transaction can be justified based on your understanding of the strengths and weaknesses of the two firms and perceived opportunities and threats to the two firms in the marketplace? Be specific.
Q:
________ cannot explain the empirical fact that interest rates on bonds of different maturities tend to move together.
A) The market segmentation theory
B) The expectations theory
C) The liquidity premium theory
D) Both A and B of the above
E) Both A and C of the above
Q:
How would the combined firms be able to better satisfy these needs than the competition?
Q:
What factors internal to Adobe and Omniture seem to be driving the transaction? Be specific.
Q:
Since yield curves are usually upward sloping, the ________ indicates that, on average, people tend to prefer holding short-term bonds to long-term bonds.
A) market segmentation theory
B) expectations theory
C) liquidity premium theory
D) both A and B of the above
E) both A and C of the above
Q:
What factors external to Adobe and Omniture seem to be driving the transaction? Be specific.
Q:
Which theory of the term structure proposes that bonds of different maturities are not substitutes for one another?
A) market segmentation theory
B) expectations theory
C) liquidity premium theory
D) separable markets theory
Q:
Who are Adobes and Omnitures customers and what are their needs?
Q:
In actual practice, short-term interest rates are just as likely to fall as to rise; this is the major shortcoming of the
A) market segmentation theory.
B) expectations theory.
C) liquidity premium theory.
D) separable markets theory.
Q:
Examples of corporate level strategies include which of the following:
a. Growth
b. Diversification
c. Operational
d. Financial
e. All of the above
Q:
According to the liquidity premium theory of the term structure, when the yield curve has its usual slope, the market expects
A) short-term interest rates to rise sharply.
B) short-term interest rates to drop sharply.
C) short-term interest rates to stay near their current levels.
D) none of the above.
Q:
Which of the following are common objectives of an external analysis?
a. Determining where to compete
b. Determining how to compete
c. Identifying core competencies
d. A & B only
e. A, B, & C
Q:
According to the liquidity premium theory of the term structure, a downward-sloping yield curve indicates that short-term interest rates are expected to
A) rise in the future.
B) remain unchanged in the future.
C) decline moderately in the future.
D) decline sharply in the future.
Q:
If the yield curve has a mild upward slope, the liquidity premium theory indicates that the market is predicting
A) a rise in short-term interest rates in the near future and a decline further out in the future.
B) constant short-term interest rates in the near future and further out in the future.
C) a decline in short-term interest rates in the near future and a rise further out in the future.
D) a decline in short-term interest rates in the near future and an even steeper decline further out in the future.
Q:
Which of the following phases of the acquisition process contains a feedback loop?
a. Negotiation phase
b. Search phase
c. Integration phase
d. Post-closing evaluation phase
e. Closing
Q:
Which of the following are not components of the negotiation phase of the acquisition process?
a. Refining valuation
b. Identifying potential target firms
c. Conducting due diligence
d. Structuring the deal
e. Developing the financing plan
Q:
If the yield curve slope is flat, the liquidity premium theory indicates that the market is predicting
A) a mild rise in short-term interest rates in the near future and a mild decline further out in the future.
B) constant short-term interest rates in the near future and further out in the future.
C) a mild decline in short-term interest rates in the near future and a continuing mild decline further out in the future.
D) constant short-term interest rates in the near future and a mild decline further out in the future.
Q:
Which of the following are true of real options?
a. Real options give management the ability to delay the implementation of a strategy
b. Real options give management the ability to accelerate the implementation of a strategy
c. Real options give management the ability to abandon a strategy
d. Real options represent the ability of management to change their strategy after the strategy has been
implemented.
e. All of the above
Q:
According to the liquidity premium theory of the term structure,
A) because buyers of bonds may prefer bonds of one maturity over another, interest rates on bonds of different maturities do not move together over time.
B) the interest rate on long-term bonds will equal an average of short-term interest rates that people expect to occur over the life of the long-term bonds plus a term premium.
C) because of the positive term premium, the yield curve cannot be downward-sloping.
D) all of the above.
E) only A and B of the above.
Q:
Stakeholders include which of the following groups?
a. Shareholders
b. Customers
c. Lenders
d. Suppliers
e. All of the above
Q:
According to the liquidity premium theory of the term structure,
A) the interest rate on long-term bonds will equal an average of short-term interest rates that people expect to occur over the life of the long-term bonds plus a liquidity premium.
B) buyers of bonds may prefer bonds of one maturity over another, yet interest rates on bonds of different maturities move together over time.
C) even with a positive liquidity premium, if future short-term interest rates are expected to fall significantly, then the yield curve will be downward-sloping.
D) all of the above.
E) only A and B of the above.
Q:
Which of the following are components of a business strategy?
a. Mission/vision
b. Objectives
c. Internal analysis
d. External analysis
e. All of the above
Q:
The liquidity premium theory of the term structure
A) assumes investors tend to prefer short-term bonds because they have less interest-rate risk.
B) assumes that interest rates on the long-term bond respond to demand and supply conditions for that bond.
C) assumes that an average of expected short-term rates is an important component of interest rates on long-term bonds.
D) assumes all of the above.
E) assumes none of the above.
Q:
Which of the following are components of an acquisition plan?
a. Timetable
b. Resource/capability evaluation
c. Management preferences
d. Objectives
e. All of the above
Q:
The liquidity premium theory of the term structure
A) indicates that today's long-term interest rate equals the average of short-term interest rates that people expect to occur over the life of the long-term bond.
B) assumes that bonds of different maturities are perfect substitutes.
C) suggests that markets for bonds of different maturities are completely separate because people have different preferences.
D) does none of the above.
Q:
Which of the following are ways to implement a firms business strategy?
a. Merge or acquisition
b. Joint venture
c. Going it alone
d. Asset swap
e. All of the above
Q:
According to the market segmentation theory of the term structure,
A) the interest rate for bonds of one maturity is determined by the supply and demand for bonds of that maturity.
B) bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time.
C) investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope downward.
D) only A and B of the above.
Q:
An acquisition plan entails all of the following except for
a. Identifies key management objectives for making an acquisition
b. Determines important resource constraints
c. Articulates managements preferences for acquiring stock or assets or considering competitors as possible targets
d. Constitutes the firms business plan
e. Defines roles and responsibilities of those on the acquisition team
Q:
According to the market segmentation theory of the term structure,
A) the interest rate for bonds of one maturity is determined by the supply and demand for bonds of that maturity.
B) bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time.
C) investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope upward.
D) all of the above.
E) none of the above.
Q:
If the expected path of one-year interest rates over the next five years is 2 percent, 4 percent, 1 percent, 4 percent, and 3 percent, then the pure expectations theory predicts that the bond with the lowest interest rate today is the one with a maturity of
A) one year.
B) two years.
C) three years.
D) four years.
Q:
All of the following are true about product life cycles except for
a. Strong sales growth and low barriers to entry often characterize the early stages of a products introduction
b. New entrants have substantially poorer cost positions, as a result of their small market shares when compared to earlier entrants.
c. Later phases are characterized by slower market growth rates
d. During the high growth phases, firms usually experience high positive operating cash flow
e. The introduction of product enhancements can extend a firms product life cycle
Q:
If the expected path of one-year interest rates over the next five years is 1 percent, 2 percent, 3 percent, 4 percent, and 5 percent, then the pure expectations theory predicts that the bond with the highest interest rate today is the one with a maturity of
A) one year.
B) two years.
C) three years.
D) four years.
E) five years.
Q:
All of the following are true about experience curves except for
a. Applicable primarily to differentiation strategies
b. Applicable primarily to cost leadership strategies
c. Reflect declining average unit costs due to increasing accumulated production levels
d. Reflect both economies of scale and the introduction of more efficient production methods as output increases
e. Often found in commodity-type industries
Q:
All of the following represent generic business strategies except for
a. Cost leadership
b. Differentiation
c. Focus
d. Market segmentation
e. A and D
Q:
If the expected path of one-year interest rates over the next four years is 5 percent, 4 percent, 2 percent, and 1 percent, then the pure expectations theory predicts that today's interest rate on the four-year bond is
A) 1 percent.
B) 2 percent.
C) 4 percent.
D) none of the above.
Q:
A good mission statement should be
a. Very broadly defined
b. Very narrowly defined
c. Reference the firms targeted markets, product or service offering, distribution channels and managements core operating beliefs
d. Describe only the purpose of the corporation
e. A and C only
Q:
According to the expectations theory of the term structure,
A) yield curves should be equally likely to slope downward as to slope upward.
B) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future.
C) when the yield curve is downward-sloping, short-term interest rates are expected to remain relatively stable in the future.
D) all of the above.
E) only A and B of the above.
Q:
In a conducting a self-assessment, a firm should consider all of the following except for
a. The degree on government regulation in its targeted markets
b. The effectiveness of its R&D activities
c. Product quality
d. Responsiveness to changing customer needs
e. Brand name recognition
Q:
According to the expectations theory of the term structure,
A) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future.
B) when the yield curve is downward-sloping, short-term interest rates are expected to remain relatively stable in the future.
C) investors have strong preferences for short-term relative to long-term bonds, explaining why yield curves typically slope upward.
D) all of the above.
E) only A and B of the above.
Q:
In selecting an appropriate business strategy, all of the following are relevant questions except for
a. Does the firm have sufficient resources to implement the strategy?
b. Have all reasonable alternatives available for implementing the strategy been evaluated?
c. What are the key assumptions underlying the various strategic options under consideration?
d. What do the firms targeted customers primarily consider in making purchasing decisions?
e. Why might an acquisition be preferred to a joint venture in implementing the business strategy?
Q:
According to the expectations theory of the term structure,
A) when the yield curve is steeply upward-sloping, short-term interest rates are expected to rise in the future.
B) when the yield curve is downward-sloping, short-term interest rates are expected to decline in the future.
C) buyers of bonds prefer short-term to long-term bonds.
D) all of the above.
E) only A and B of the above.
Q:
What is the core competence underlying Honda Corporation product offering?
a. Product distribution
b. Marketing
c. Internal combustion engine design
d. Exterior design
e. Organizational structure
Q:
According to the expectations theory of the term structure,
A) the interest rate on long-term bonds will exceed the average of expected future short-term interest rates.
B) interest rates on bonds of different maturities move together over time.
C) buyers of bonds prefer short-term to long-term bonds.
D) all of the above.
E) only A and B of the above.
Q:
Which of the following examples represents the best application of a firms primary core competence?
a. Honda Motors manufactures cars, motorcycles, lawnmowers, and snow blowers
b. IBM provides both software services and manufactures computer hardware
c. PepsiCo manufactures and distributes soft drinks and manages restaurant chains
d. Microsoft sells operating system software and access to the internet through its MSN subscription service
e. McDonalds sells hamburgers and pizza.
Q:
Economists' attempts to explain the term structure of interest rates
A) illustrate how economists modify theories to improve them when they are inconsistent with the empirical evidence.
B) illustrate how economists continue to accept theories that fail to explain observed behavior of interest rate movements.
C) prove that the real world is a special case that tends to get short shrift in theoretical models.
D) have proved entirely unsatisfactory to date.
Q:
All of the following questions are relevant for conducting a self-assessment or internal analysis of the firm except fora. What are the firms critical strengths and weaknesses as compared to the competition?c. Can the firms critical strengths be used to gain strategic advantage in the firms chosen market?d. What are the least important factors customers consider in making purchasing decisions?e. Can the firms key weaknesses be exploited by the competition?
Q:
When yield curves are steeply upward-sloping,
A) long-term interest rates are above short-term interest rates.
B) short-term interest rates are above long-term interest rates.
C) short-term interest rates are about the same as long-term interest rates.
D) medium-term interest rates are above both short-term and long-term interest rates.
E) medium-term interest rates are below both short-term and long-term interest rates.
Q:
Market profiling requires an analysis of all of the following factors except for:
a. Customers
b. Suppliers
c. Core competencies
d. Current and potential competitors
e. Product or service substitutes
Q:
Typically, yield curves are
A) gently upward-sloping.
B) gently downward-sloping.
C) flat.
D) bowl shaped.
E) mound shaped.
Q:
Determining where a firm should compete requires management to consider which of the following factors?
a. Determining the firms current customers only
b. Determining the firms potential customers only
c. Determining the needs of current and potential customers, as well as suppliers
d. Determining the needs of potential suppliers only
e. A and D only
Q:
Yield curves can be classified as
A) upward-sloping.
B) downward-sloping.
C) flat.
D) all of the above.
E) only A and B of the above.
Q:
Determining how to compete requires a firms management to consider which of the following factors?
a. Factors critical to successfully competing in its targeted markets
b. An external market analysis
c. An evaluation of what criteria customers use to make buying decisions
d. Availability of product substitutes
e. All of the above