Q1. The Government of Eastland is concerned that competition within its private healthcare industry is being distorted by the dominant position of the market leader, Delta Care. The Government has instructed the industry regulator to investigate whether the industry is operating fairly in the interests of patients. Which of the following factors might the industry regulator review as part of their investigation? Select ALL that apply.
A.Profits amongst healthcare providers
B. Each healthcare provider's market share
C. Prices across the industry
D. Medical treatment efficacy rates
E. Industry entry barriers
Correct Answer: A, B, D
Q2. Which THREE of the following statements are true of a money market hedge?
A.They offer roughly the same outcome as a forward contract.
B. They leave the company exposed to currency risks.
C. They may be a little more flexible in comparison to a forward contract.
D. They are more complex than forward contracts.
E. They are easy to set up.
Correct Answer: A, B, D
Q3. F Co. is a large private company, the founder holds 60% of the company's share capital and her 2 children each hold 20% of the share capital. The company requires a large amount of long-term finance to pursue expansion opportunities, the finance is required within the next 3 months. The family has agreed that an Initial Public Offering (IPO) should not be pursued at this time, because it would take up to 12 months to arrange. The existing shareholders are currently considering raising the required finance from an established Venture Capitalist in the form of debt and equity. The Venture Capitalist has agreed to provide the required finance provided it can earn a return on investment of 25% per year. In addition, the Venture Capitalist requires 60% of the equity capital, a directorship in the company and a veto on all expenditure of a capital or revenue nature above a specified limit. From the perspective of the family, which of the following are advantages of raising the required finance from the Venture Capitalist? Select all that apply.
A.The cost of the finance under the Venture Capital investment.
B. The changes in shareholding as a result of the Venture Capital investment.
C. The veto on expenditure above a specified level of a revenue or capital nature.
D. The speed with which the finance can be obtained.
E. The experience of the Venture Capitalist with growing businesses.
Correct Answer: A, C
Q4. Which THREE of the following statements are true of a money market hedge?
A.They offer roughly the same outcome as a forward contract.
B. They leave the company exposed to currency risks.
C. They may be a little more flexible in comparison to a forward contract.
D. They are more complex than forward contracts.
E. They are easy to set up.
Correct Answer: A, B, D
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