Question

Please Answer all of them, I don't have much time, Thank you

68) Large firms tend to be

A) net users of trade credit.

B) net suppliers of trade credit.

C) firms with high levels of profitability.

D) firms with low levels of inventory turnover and accounts receivable turnover.

69) From the banker's point of view, short-term bank credit is an excellent way of financing

A) fixed assets.

B) permanent working capital needs.

C) repayment of long-term debt.

D) seasonal bulges in inventory and receivables.

70) The cost of not taking the discount on trade credit of 3/20, net 90 is approximately ________.

A) 15.9%

B) 16.3%

C) 18.0%

D) 17.4%

71) Bank loans to business firms

A) are usually short-term in nature.

B) are preferred by the banker to be self-liquidating.

C) may require compensating balances.

D) All of these options are true.

74) Recent problems facing the U.S. financial system were the result of all but which one of the following?

A) A huge increase in the amount of mortgage-backed securities being bundled up and sold in the markets

B) A huge drop in the value of mortgage-backed securities

C) An increase in the use of commercial paper for short-term financing

D) The government permitting commercial and investment banks to merge

75) The prime rate

A) is the rate a bank charges its risky customers.

B) has been quite volatile during the past two decades, moving several percentage points in a 12-month period.

C) is usually lower than Treasury bill rates.

D) None of these options are true.

76) The London Interbank Offered Rate (LIBOR)

A) competes with the U.S. Prime Rate for those companies with an international presence.

B) has been lower than the U.S. Prime Rate for at least the last decade.

C) is an estimate of the interbank lending rate for London banks.

D) all of these options are correct.

77) LIBOR is

A) a resource used in production.

B) an interest rate paid on Eurodollar loans in the London market.

C) an interest rate paid by European firms when they borrow Eurodollar deposits from U.S. banks.

D) the interest rate paid by the British government on its long-term bonds.

Answer 1

68. Option B.Net suppliers of trade credit

Because Larger firms tend to have relatively higher accounts receivables which leads to net supply of trade credit

69. Option D. seasonal bulges in inventory and receivables

70. Option A 15.9%

71. Option D All of these options are true.

74. Option C. An increase in the use of commercial paper for short-term financing

75. Option D. None of these options are true. Prime rate are offered to credit worthy customers

76. Option D. all of these options are correct.

77. Option B. An interest rate paid on Eurodollar loans in the London market.

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