Test 2

I.

Listen to the interview. According to what Jean-Christian Lambelet says, are the following statements TRUE or FALSE? (20分)

1. It seems likely that a world currency would be good for business. 2. A world central bank is highly unlikely prospect.

3. There is often very little economic coordination between different countries. 4. A global tax system would be necessary to counter any serious global

economic problem.

5. A common European currency is inevitable.

6. Floating exchange rates were first introduced in 1953. 7. In 1978, speculators attacked the Swiss franc.

8. The system we have is not perfect, but is the best that we can expect in an

imperfect world.

9. It would not be enough to have a world central bank Because you’d also need

to have some kind of world fiscal system.

10. Pegged exchange rate run into severe problems with capital flows. II. VOCABULARY: write the words or expressions defined in the following. (30)

1. a period during which an economy is working below its potential 2. a merger with or the acquisition of one’s suppliers

3. a general name for all financial instruments whose price depends on the

movement of another price

4. a public offer to a company’s shareholders to buy their shares, at a particular

price during a particular period, so as to acquire a company 5. ready to buy, requiring no alternation

6. another company’s shares on the stock exchange, hoping to persuade enough

other shareholders to sell to take control of the company 7. exchange rate which is determined by supply and demand

8. combined production that is greater than the sum of the separate part

9. all the money that a company will have to pay to someone else in the future,

including taxes, debts, and interest and mortgage payments

10. making contracts to buy or sell a commodity or financial asset at a

pre-arranged price in the future as a protection or insurance against price changes

III. TRUE/FALSE: Write ‘T’ if the statement is true and ‘f’ if the statement is

false.(25)

1. The argument in favor of market concentration or at least in favor of

monopoly, are obvious: monopolists are always able to make excessive profits, and business facing no competition have no incentive to find ways to reduce costs.

2. Stock is a major source of equity financing for corporations. With the funds

raised through selling shares of stock, companies can purchase fixed assets

such as land, building and equipment.

3. In a merger of two corporations, the shareholders usually have their shares in

the old company exchanged for an equal number of shares in the merged entity. Unlike in a merger, in an acquisition, the acquiring firm usually offers a cash price per share to the target company’s shareholders or the acquiring firm's shares to the shareholders of the target firm according to a specified conversion ratio.

4. Forward contracts are exchange-traded and, therefore, are standardized

contracts. Future contracts on the other hand, are private agreements between two parties and are not as rigid in their stated terms and conditions

5. A \"friendly\" takeover usually involves negotiations between two companies

in which the \"bidder\" makes an offer to buy all of the stock of the \"target\" company from its shareholders for an amount in excess of the current public trading price of the target's shares. The board of directors of the target company may recommend the deal to shareholders as fair and advisable. 6. A merger can resemble a takeover but without a new company name.

7. Dilutive mergers are whereby a company's EPS decreases. The company will

be one with a low P/E acquiring one with a high P/E.

8. A buyout is an investment transaction by which an entire company or a

controlling part of the stock of a company is sold.

9. In a leveraged buyout or (LBO), an people inside the company will obtain a

loan to buy the company's shares or assets and will pledge the assets and revenues of the company as security collateral to assure the repayment of the loan, just like a mortgage loan secured by the pledge of the house as collateral to secure repayment of the loan.

10. Efficiency is the capability of acting or producing effectively with a

minimum of waste, expense, or necessary effort. The term has widely variant meanings in different disciplines. IV.

The often incompatible goals of the financial, marketing and production (or operations) departments. Classify the following strategies according to which departments would probably favor them. (25) 1. a factory working at full capacity 2. a large advertising budget

3. a large sales force earning high commission 4. a standard product without optional features 5. a strong cash balance

6. generous credit facilities for customer 7. high profit margins

8. large inventories to make sure that products are available 9. low research and development spending

10. machines that give the possibility of making various different products