The difference between liquidation and reorganization

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Reference no: EM131867726

1. Which of the following statements about capitalization rates is true?

A. It is the return on the equity investment.

B. It is the unlevered return on investment in the property.

C. It is a performance measure expressing the relationship between income and property value at a specific point of time.

D. It is a performance measure explicitly identifying the relationship between year-to-year changes in income and property values over time.

2. The difference between liquidation and reorganization is that a:

A. liquidation deals with net working capital while a reorganization deals with long-term liabilities.

B. liquidation terminates all operations and a reorganization maintains the option of the firm as a going concern.

C. a liquidation must occur outside of bankruptcy while a reorganization involves the bankruptcy process.

D. reorganization terminates all operations of the firm while a liquidation only terminates non-profitable operations.

E. liquidation terminates all operations immediately while a reorganization terminates operations over two, or more, years.

Reference no: EM131867726

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