Fony Corp, Headquartered in China, Is a Leading Manufacturer of Electronic

question 25

Multiple Choice

Fony Corp., headquartered in China, is a leading manufacturer of electronic devices and solutions intended for professional markets. The company is considering upgrading the technology currently being used at Fony's manufacturing facility, located in Guangdong, that specializes in producing lithium-ion batteries, which are used to power laptops, cameras, cell phones, and other similar gadgets. The new technology is expected to increase efficiency levels and will also allow for greater adherence to quality standards.
-Which of the following, if true, would most weaken the argument that Fony Corp. should upgrade its technology?

• A) Employees fear that the new technology will render them obsolete.
• B) The company will be able to recover the cost of the technology within four years of implementation.
• C) The new technology is expected to reduce the company's overall cost of production.
• D) The company's main client is threatening legal action after it had to recall nearly 2 million notebooks owing to defective batteries.
• E) The technology which the company is considering adopting was recently developed and has not yet been successfully implemented in a real business context.

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Definitions:

Call Premium

The amount a call option buyer pays to the seller over and above the option's intrinsic value, which reflects the time value or speculative premium of the option.

Put Premium

Put premium refers to the price that an investor must pay to purchase a put option, which grants the right to sell a specified quantity of a security at a set strike price up to the expiration date.

Callable Bond

A bond that the issuer may repurchase at a given call price in some specified period.

Straight Bond

A bond with no option features such as callability or convertibility.