The interest rate on Eurodollar loans tends to be based on A) Eurobonds B) Forward rates C) Spot rates D) LIBOR ANSWER D
Date: September 19th, 2020
The three motives for holding cash are: A) float reduction, precautionary, and speculative. B) buffer stock, speculative, and transactional. C) speculative, transactional, and precautionary. D) float reduction, buffer stock, and transactional. E) convenience, transactional, and precautionary. ANSWER C
Date: September 19th, 2020
What is a danger in using only short term borrowing? A) Higher rates than long term borrowing B) Lower fee per loan C) Cost of borrowing can increase D) Less flexibility ANSWER C
Date: September 19th, 2020
What is an advantage of short term lending for banks? A) New fees every loan B) More flexibility C) Locked in rates D) Increased clients ANSWER A
Date: September 19th, 2020
What does a self-liquidating bank loan mean? A) The loan pays of itself. B) The loan is received in cash only. C) The loan is used to purchase assets that are worth more than the loan. D) The loan is used to finance an asset that will pay off the loans. ANSWER D
Date: September 19th, 2020
All of the following are forms of short term financing EXCEPT: A) Receivable financing B) Inventory financing C) Lines of Credit D) Self-liquidating loans ANSWER C
Date: September 19th, 2020
A bank will typically lend the firm no more than ________% of the book value of receivables. A) 70 B) 80 C) 60 D) 50 E) 40 ANSWER B
Date: September 19th, 2020
The firm borrows a portion of the value of its inventory and pays off the loan from the proceeds generated by selling the inventory. This is known as: A) Inventory financing B) Receivable financing C) Sales financing D) Liquidation financing ANSWER A
Date: September 19th, 2020
Eurodollars are A) currencies that will disappear once the euro is adopted. B) funds created by the International Monetary Fund to be transferred among the world’s central banks. C) dollar-denominated deposits held in European banks. D) European currencies deposited in U.S. banks. E) dollar-denominated deposits held in foreign banks. ANSWER E
Date: September 19th, 2020
This kind of financing requires the firm to pledge its accounts receivables to the bank as collateral for the loan. A) Inventory financing B) Sales financing C) Receivable financing D) Liquidation financing ANSWER C
Date: September 19th, 2020
