511. Which of the following working capital strategies is the most aggressive?
A. Making greater use of short term finance and maximizing net short term asset.
B. Making greater use of long term finance and minimizing net short term asset.
C. Making greater use of short term finance and minimizing net short term asset.
D. Making greater use of long term finance and maximizing net short term asset.

512. Which of the following is not a metric to use for measuring the length of the cash cycle?
A. Acid test days.
B. Accounts receivable days.
C. Accounts payable days.
D.Inventory days.

513. What does the following trade credit jargon refer to? ‘5/7 net 30’.
A. A discount of 5% will be given for full payment within 7 days. Failing that, the account must be settled in 30 days.
B. A discount of 7% will be given for full payment within 5 days. Failing that, the account must be settled in 30 days.
C. A discount of 30% will be given for full payment within 7 days. Failing that, the account must be settled in 30 days.
D. A discount of 5% will be given for full payment within 30 days. Failing that, the account must be settled in 7 days.

514. Which of the following best describes the economic order quantity (EOQ) model?
A. The EOQ model is based on the trade-off between average order cost which increases with order quantity and average storage cost which declines with order quantity.
B. The EOQ model is based on the trade-off between average order cost which increases with order quantity and average storage cost which increases with order quantity.
C. The EOQ model is based on the trade-off between average order cost which declines with order quantity and average storage cost which increases with order quantity.
D. The EOQ model is based on the trade-off between average order cost which declines with order quantity and average storage cost which declines with order quantity.

515. Which of the following is not a classic economic motive for holding money?
A. Transactions motive: day-to-day expenditure.
B. Need for compensation balance: often a condition of the bank providing commercial loans or other financial services.
C. Speculative motive: cash flow that can be deployed quickly in the event of an investment opportunity.
D. Precautionary motive: cash for unexpected expenditure.

516. Which of the following is the correct formula for the Baumol inventory model of cash management?
A. Z = √ (2k/FT)
B. Z = √(2Fk/T)
C. Z = √(3FT/k)
D. Z = √(2FT/k)

517. Which of the following is the correct formula for Z, the average cash holding, in the Miller-Orr model of cash management?
A. Z = 2√(3FV/4k) + L
B. Z = 3√(4FV/3k) + L
C. Z = 3√(3FV/4k) + L
D. Z = 3√(3FkV/4) + L

518. Which of the following is typically the most important economy or synergy which is sought from Mergers and Acquisitions M&A activity?
A. Economies of scope from applying existing resources to new uses, at little additional cost.
B. Revenue and marketing synergies from new, enhanced, or more efficient distribution.
C. Economies of scale effects from organizational learning.
D. Economies of scale from doing away with duplication of function between the two firms.

519. Which of the following would be a legitimate stated reason for an acquisition?
A. The acquisition of critical mass.
B. Hubris.
C. Empire building.
D. The acquisition of monopoly.

520. When British Airways merged with Iberia, the Spanish airline, what kind of merger was this?
A. Vertical.
B. Horizontal.
C. Joint venture.
D. Conglomerate.

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