Ch23 - COURSES > FUNDAMENTALS OF CORPORATE FINANCE:,...

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Add, modify, and remove questions. Select a question type from the Add Question drop-down list and click Go to add questions. Use Creation Settings to establish which default options, such as feedback and images, are available for question creation. COURSES > FUNDAMENTALS OF CORPORATE FINANCE:, 9/E - ROSS > CONTROL PANEL > POOL MANAGER > POOL CANVAS Pool Canvas Add Multiple Choice Creation Settings Name Chapter 23 Risk Management: An Introduction to Financial Engineering Description Questions which Blackboard's assessment component is incapable of supporting are not included in the export. Instructions Add Question Here Question 1 Multiple Choice Question Farmer Jones raises several hundred acres of corn and would suffer a significant loss should the price of corn decline at harvest time. Which one of the following would he be doing if he purchased financial securities to offset this price risk? Answer abating deriving hedging forwarding manipulating Correct Feedback Refer to section 23.1 Incorrect Feedback Refer to section 23.1 Add Question Here Question 2 Multiple Choice Question The value of a stock option is dependent upon the value of the underlying stock. Thus, a stock option is a: Answer forward agreement. derivative security. mezzanine asset. contingent security. junior security. Correct Feedback Refer to section 23.1 Incorrect Feedback Refer to section 23.1 Add Question Here Question 3 Multiple Choice Question Farmer Mac owns a large orange grove in Florida. The value of his business is directly related to the price of oranges. Which one of the following is a graphical representation of this price-value relationship? Answer exchange line net present value profile risk profile market line return grid Correct Feedback Refer to section 23.2 Incorrect Feedback Refer to section 23.2 Add Question Here Question 4 Multiple Choice Question Farmer Ted planted 200 acres in wheat this year. The weather has been perfect and he expects to harvest a record crop within the next two weeks. At present, he has no storage facilities and therefore must
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sell his crop as soon as it is harvested. Which one of the following risks is he facing because he must sell his crop at whatever the market price is at harvest time? Answer futures risk volatility exposure surplus risk transactions exposure translation exposure Correct Feedback Refer to section 23.2 Incorrect Feedback Refer to section 23.2 Add Question Here Question 5 Multiple Choice Question For years, your family has operated a business that produces lawn mowers. Over the years, the industry has progressed and new mass production techniques have been developed. However, your firm cannot afford this new technology, nor can you compete against those firms that can. Thus, the family has decided to close its facility at the end of the year. Which one of the following describes the risks to which your family's firm succumbed? Answer
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This note was uploaded on 06/22/2010 for the course FIN 600 taught by Professor Marks during the Spring '10 term at Odessa College.

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Ch23 - COURSES > FUNDAMENTALS OF CORPORATE FINANCE:,...

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