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1 | |
The largest provider of short-term credit for a business is: |
| | A) | banking organizations |
| | B) | suppliers to the firm |
| | C) | commercial paper |
| | D) | Eurodollars |
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2 | |
The number of days until the firm is past due to a supplier is called the: |
| | A) | discount period |
| | B) | term to credit |
| | C) | payment period |
| | D) | none of the above |
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3 | |
If a firm is given trade credit terms of 2/10, net 30, then the cost of the firm failing to take the discount is: |
| | A) | 2% |
| | B) | 30% |
| | C) | 36.72% |
| | D) | 10% |
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4 | |
The interest rate given by a bank to its most creditworthy customers is the: |
| | A) | prime rate |
| | B) | LIBOR rate |
| | C) | federal funds rate |
| | D) | discount rate |
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5 | |
Which of the following types of bank loans generally have the highest effective rate of interest? |
| | A) | simple interest loan |
| | B) | discount interest loan |
| | C) | loan with a compensating balance |
| | D) | installment loan |
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6 | |
If a firm needs to borrow $100,000, at 8% interest, to finance working capital needs and a 20% compensating is required, then the firm should borrow __________. |
| | A) | $100,000 |
| | B) | $80,000 |
| | C) | $125,000 |
| | D) | $108,000 |
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7 | |
If a bank offers a firm a simple interest $1000 loan at 6% interest and the loan is outstanding for 120 days, what is the effective rate of interest on the loan? |
| | A) | 18.00% |
| | B) | 6.00% |
| | C) | 20.00% |
| | D) | none of the above |
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8 | |
If a company raises money to finance short-term needs by selling its accounts receivable to another party, this is called ___________. |
| | A) | pledging |
| | B) | warehousing |
| | C) | factoring |
| | D) | none of the above |
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9 | |
The most restrictive policy for using inventory as collateral for short-term borrowing is called: |
| | A) | blanket inventory lien |
| | B) | warehousing inventory |
| | C) | trust receipt |
| | D) | factoring |
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10 | |
A type of accounts receivable financing where a firm uses its receivables as collateral is called: |
| | A) | pledging |
| | B) | securitization |
| | C) | factoring |
| | D) | warehousing |
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