Question 1: If you own bonds in a company that has filed for Chapter 7 bankruptc

Question

Question 1: If you own bonds in a company that has filed for Chapter 7 bankruptcy you will not receive any repayment at all. True False

QUESTION 2 According to Hampton, “Tagging” risks removes the clutter of multiple levels of exposure and enables the manager to focus on important risks. True False

QUESTION 3 When a company’s assets are allocated by the court in a bankruptcy, owners of the company have the last claim on assets and may not receive anything if the secured and unsecured creditors’ claims are not fully repaid. True False

QUESTION 4 EADS did not use risk visualization in its ERM program and this was the reason that the company did not foresee the problems with the size of the A380 plane relative to airport capacity. True False

QUESTION 5 Companies that file for Chapter 7 bankruptcy are generally in worse financial condition than companies that file for Chapter 11 bankruptcy. These companies have less chance of emerging from bankruptcy and becoming profitable. True False

Explanation / Answer

True.

As the company has gone bankrupt, it cannot repay its debt and bond is nothing but debt taken by the company.

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