Active TopicsActive Topics  Display List of Forum MembersMemberlist  Search The ForumSearch  HelpHelp
  RegisterRegister  LoginLogin
BEC STUDY GROUP
 CPAnet Forum : BEC STUDY GROUP
Subject Topic: Becker and Wiley have the same questions (Topic Closed Topic Closed) Post ReplyPost New Topic
  
Author
Message << Prev Topic | Next Topic >>
Godgift
Regular
Regular


Joined: 15 Oct 2009
Online Status: Offline
Posts: 100
Posted: 22 Jun 2010 at 16:53 | IP Logged  

Becker and Wiley have the same questions but different choice of answers and they both picked different answer (see the underlined)

Q: When a firm finances each asset with a financial instrument of the same approximate maturity as the life of the asset, it is applying:

 

Becker Choice of answers:

 

A Working capital

B Return Maximization

C Financial Leverage

D Operating leverage

 

 

Wiley Choice of answers

A Working Capital

B Return Maximization

C Financial Leverage

D Hedging approach

 

Does anyone know what is the best choice of answer ?

Back to Top View Godgift's Profile Search for other posts by Godgift
 
bernstein.chang
Newbie
Newbie


Joined: 05 Apr 2010
Location: United States
Online Status: Offline
Posts: 23
Posted: 23 Jun 2010 at 01:52 | IP Logged  

In my opinion, wiley's answer is correct...

Matching same maturity-life financial assets and liabilities is a mean of hedging. 

 

Back to Top View bernstein.chang's Profile Search for other posts by bernstein.chang
 
Godgift
Regular
Regular


Joined: 15 Oct 2009
Online Status: Offline
Posts: 100
Posted: 23 Jun 2010 at 16:54 | IP Logged  

Thanks, i agree with you because working captial applies to current assets but got a little confused!!!

Back to Top View Godgift's Profile Search for other posts by Godgift
 
usmcretd
Newbie
Newbie


Joined: 03 Jul 2010
Online Status: Offline
Posts: 17
Posted: 11 Jul 2010 at 16:48 | IP Logged  

I disagree.

The question address maturity-matching, which is part of working capital management, therefore I believe Becker's answer is better. There is an element of "maturity matching" in hedging, but only when dealing with foreign currency transactions, which are not referenced in the question.  Also, hedging does not typically deal with financing assets.

Back to Top View usmcretd's Profile Search for other posts by usmcretd
 
jsanders02
Regular
Regular


Joined: 16 Apr 2010
Location: United States
Online Status: Offline
Posts: 215
Posted: 12 Jul 2010 at 11:34 | IP Logged  

Hedging does not only deal with foreign currency. Hedging
is selling a security to protect the value of assets or
cash flows. To me, that makes hedging a better answer for
this question.

However, since hedging was not a choice in the Becker
question, working capital is the best answer available.
Working capital generally deals with being able to meet
short-term obligations, and this question does not deal
exclusively with short-term obligations.

__________________
BEC: 91
FAR: 93
AUD: 94
REG: 86
All four parts on first try!
Back to Top View jsanders02's Profile Search for other posts by jsanders02
 



Sorry, you can NOT post a reply.
This topic is closed.


  Post ReplyPost New Topic
Printable version Printable version

Forum Jump
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum

Powered by Web Wiz Forums version 7.9
Copyright ©2001-2010 Web Wiz Guide

This page was generated in 0.1113 seconds.

Copyright © 1996-2016 CPAnet/MizWeb Communities All Rights Reserved
Twitter
|Facebook |CPA Exam Club | About | Contact | Newsletter | Advertise & Promote