The best source of information about a customer’s credit is/are A) the firm’s experience with the customer. B) Dun and Bradstreet. C) information from the customer’s bank. D) data from financial markets. E) credit references supplied by the customer. ANSWER A
Date: September 19th, 2020
An accounts receivable aging schedule is used to A) decide whether to extend credit. B) determine whether legal action should be taken against a customer with a past due account. C) provide information about whether the firm’s prices are too low. D) monitor accounts receivable. E) make decisions regarding the length of time a firm […]
Date: September 19th, 2020
Insisting the contracts be denominated in the U.S. dollar can help avoid ________. A) Exchange rate risk B) Arbitrage C) Political risk D) PPP ANSWER A
Date: September 19th, 2020
The ________ is as close to a worldwide currency as there is. A) British pound B) U.S. Dollar C) Euro D) Canadian Dollar ANSWER B
Date: September 19th, 2020
What stipulates how a firm will handle each phase of the credit decision? A) Credit Policy B) Credit Period C) Trade Credit D) Cash Discount ANSWER A
Date: September 19th, 2020
Understanding interest rate parity requires that we first understand: A) Purchasing power parity B) Interest rate arbitrage C) Spot Rates D) Purchasing power arbitrage ANSWER B
Date: September 19th, 2020
1 year ago $1 would buy 6.5 pesos. Today $1 buys 7.5 pesos. If the US had an inflation rate of 3%, calculate Mexico’s inflation rate. A) 3.1% B) 18.38% C) 4.2% D) 7.8% ANSWER B
Date: September 19th, 2020
The theory that exchange rates must adjust so that there is no reason for funds to flow from one country just to take advantage of better returns in another is part of: A) Purchasing power parity B) Purchasing power arbitrage C) Interest rate parity D) Interest rate arbitrage ANSWER C
Date: September 19th, 2020
The DuPont analysis calculates ROE as the product of A) leverage, market value, and turnover. B) margin, turnover, and leverage. C) profitability, liquidity, and leverage. D) activity, leverage, and debt. E) margin, profitability, and leverage. ANSWER B
Date: September 19th, 2020
Each of the following is a decision that can be avoided if a firm refuses to offer credit EXCEPT: A) Collection period B) Discounts to give fast payers C) Accounts Payable D) Who to extend credit to ANSWER C
Date: September 19th, 2020
