Download Quiz 8 with Answers - Financial Management I | EGMT 535 and more Quizzes Financial Management in PDF only on Docsity! Question 1 1 out of 1 points A central question that must be addressed in bankruptcy proceedings is whether the firm's inability to meet scheduled interest payments results from a temporary cash flow problem or from a potentially permanent problem caused by falling asset values. Answer Selected Answer: b. Tru e Correct Answer: b. Tru e Question 2 1 out of 1 points In the event of bankruptcy under the federal bankruptcy laws, debtholders have a prior claim to a firm's income and assets before both common and preferred stockholders. Moreover, in a bankruptcy all debtholders are treated equally as a single class of claimants. Answer Selected Answer: b. Fals e Correct Answer: b. Fals e Question 3 0 out of 1 points Bankruptcy plays no role in settling labor disputes and product liability suits. Such issues are outside the bounds of bankruptcy law and are covered by other statutes. Answer Selected Answer: b. Tru e Correct Answer: a. Fals e Question 4 1 out of 1 points Bankruptcy laws have been used to help reach settlements in major product liability lawsuits. By using financial projections to show that contingent claims against the company jeopardize its existence, agreements are reached, partially satisfying claimants, and allowing the firm to continue operating. Answer Selected Answer: a. Tru e Correct Answer: a. Tru e Question 5 1 out of 1 points Even if a firm's cash flow projections indicate that it will soon be unable to meet its interest payments, a bankruptcy case cannot begin until the firm actually defaults on a scheduled payment. Answer Selected Answer: a. Fals e Correct Answer: a. Fals e Question 6 1 out of 1 points One of the actions that can be taken in bankruptcy under the standard of feasibility is to replace existing management with a new team if the quality of management is judged to have been substandard. Answer Selected Answer: a. Tru e Correct Answer: a. Tru e Question 7 1 out of 1 points Chapter 7 of the Bankruptcy Act is designed to do which of the following? Answer Selected e.
