Question 1

Trade credit is an example of which of the following sources of financing?

Accepted Answer

A)  spontaneous 
B)  temporary 
C)  permanent 
D)  discretionary 
A)  spontaneous 
B)  temporary 
C)  permanent 
D)  discretionary

Question 2

Current assets would usually NOT include

Accepted Answer

A)  plant and equipment. 
B)  marketable securities. 
C)  accounts receivable. 
D)  inventories. 
A)  plant and equipment. 
B)  marketable securities. 
C)  accounts receivable. 
D)  inventories.

Question 3

The primary sources of collateral for secured loans are accounts receivable and inventory.

Accepted Answer

A) True 
 B)False

Question 4

Short-term debt provides a more flexible form of financing than long-term debt.

Accepted Answer

A) True 
 B)False

Question 5

Crawley,Inc.has a line of credit with HNC Bank that allows the company to borrow up to $800,000 at an interest rate of 12 percent.However,Crawley,Inc.must keep a compensating balance of 18 percent of any amount borrowed on deposit at the bank.Crawley,Inc.does not normally keep a cash balance account with HNC Bank.What is the effective annual cost of credit?

Accepted Answer

A)  12.40% 
B)  12.83% 
C)  14.63% 
D)  15.47% 
A)  12.40% 
B)  12.83% 
C)  14.63% 
D)  15.47%

Question 6

A company that forgoes the discount when credit terms are 2/10 net 60 is essentially borrowing money from his supplier for an additional

Accepted Answer

A)  10 days. 
B)  50 days. 
C)  60 days. 
D)  70 days. 
A)  10 days. 
B)  50 days. 
C)  60 days. 
D)  70 days.

Question 7

The trade-off associated with holding large amounts of cash and marketable securities is increased liquidity offset by a reduction in the overall rate of return.

Accepted Answer

A) True 
 B)False

Question 8

Interest costs for short-term debt are generally lower than interest costs for long-term debt because

Accepted Answer

A)  the term structure of interest rates generally reflects an upward sloping yield curve. 
B)  short-term debt is more flexible, allowing a match of short-term needs with short-term financing. 
C)  investors demand higher returns on short-term debt due to liquidity concerns. 
D)  both A and B. 
A)  the term structure of interest rates generally reflects an upward sloping yield curve. 
B)  short-term debt is more flexible, allowing a match of short-term needs with short-term financing. 
C)  investors demand higher returns on short-term debt due to liquidity concerns. 
D)  both A and B.

Trade credit is an example of which of the following sources of financing?

Current assets would usually NOT include

The primary sources of collateral for secured loans are accounts receivable and inventory.

Short-term debt provides a more flexible form of financing than long-term debt.

A company that forgoes the discount when credit terms are 2/10 net 60 is essentially borrowing money from his supplier for an additional

The trade-off associated with holding large amounts of cash and marketable securities is increased liquidity offset by a reduction in the overall rate of return.

Interest costs for short-term debt are generally lower than interest costs for long-term debt because

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

International Business Finance

Cash,receivables,and Inventory Management

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Exam 15: Working-Capital Management

Trade credit is an example of which of the following sources of financing?

Current assets would usually NOT include

The primary sources of collateral for secured loans are accounts receivable and inventory.

Short-term debt provides a more flexible form of financing than long-term debt.

A company that forgoes the discount when credit terms are 2/10 net 60 is essentially borrowing money from his supplier for an additional

The trade-off associated with holding large amounts of cash and marketable securities is increased liquidity offset by a reduction in the overall rate of return.

Interest costs for short-term debt are generally lower than interest costs for long-term debt because

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

International Business Finance

Cash,receivables,and Inventory Management

Filters