If a gold producer wishes to employ a non-contingent hedge, it should use a(n) (i) contract, while if it wishes to employ a contingent hedge (i.e., to hedge only down-side risk), it should use a(n) (ii) contract. (i) (ii) a. forward put option b. put option forward c. forward call option d. call option forward […]
Date: September 19th, 2020
The objective for managing accounts receivable is to avoid credit sales as much as possible. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Firms that face a __ tax rate structure have an incentive to hedge, because it can reduce the firm’s expected tax liability. a. flat b. regressive (or concave) c. decelerating d. progressive (or convex) ANSWER D
Date: September 19th, 2020
One of the key inputs to the final credit decision is a credit analyst’s subjective judgment of a firm’s creditworthiness since it can provide a better feel of a firm’s operation than any quantitative figures. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Joe Manufacturing uses 2,400 units of a product per year on a continuous basis. The product carrying costs are $60 per year and ordering costs are $250 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in […]
Date: September 19th, 2020
A firm’s credit selection procedures must be established on a sound economic basis that considers the costs of investigating the creditworthiness of a customer and the expected size of its credit purchases. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
One of the components of a cash conversion cycle is the average collection period. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm’s credit standard is a procedure for ranking an applicant’s overall credit strength, derived as a weighted average of scores on key financial and credit characteristics. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
bonds pay coupon interest in the form of additional bonds instead of cash. a. Deferred coupon b. Payment-in-kind c. Zero-coupon d. In lieu ANSWER B
Date: September 19th, 2020
A firm’s credit selection is the process of determining the minimum requirements for extending credit to a customer. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
