The following options are all important reasons to study the theory of PPP EXCEPT: A) it provides a baseline forecast of future exchange rates that is usually considered whenever it is necessary to forecast future cash flows in different currencies. B) deviations from PPP significantly affect the profitability of firms. C) it is particularly useful […]
Controlled disbursing ________. A) reduces a firm’s average collection period B) is a popular technique for effectively managing inventory to keep its level low C) is a popular technique for increasing payment float D) reduces a firm’s average payment period ANSWER C
When the price level of an economy is ________, ________ is occurring. Conversely, when the price level is ________, ________ is occurring. A) rising, deflation, falling, inflation B) rising, inflation, falling, deflation C) falling, inflation, rising, deflation D) falling, deflation, rising, deflation ANSWER Answer: B
If a country’s freely floating currency is undervalued in terms of purchasing power parity, its capital account is likely to be A) in deficit or tending toward a deficit. B) in surplus or tending toward a surplus. C) subsidized by the International Monetary Fund. D) a candidate for loans from the World Bank. […]
What is the name given to the weighted average of the nominal prices of the goods and services consumed in the economy? A) nominal price B) monetary value C) price level D) consumption bundle ANSWER Answer: C
When managing accounts payable, a good strategy would be to ________. A) pay as early as possible creating better credit rating for a firm B) pay as slowly as possible without damaging a firm’s credit rating C) pay big customers early to maintain good relations and small customers on a later date D) pay only […]
Delaying the payment of accounts payable in order to improve cash management is known as ________. A) ACH transfers B) stretching payables C) credit scoring D) lockbox system ANSWER B
When managing accounts receivable, a good strategy would be to ________. A) send the accounts to a collection agency to extract payments B) tighten the credit terms to force the customer to pay on time C) offer cash discount without losing sales and imposing burden on customer D) make frequent personal visits to the customer […]
________ refers to funds that have been dispatched by a payer but are not in a form that can be spent by the payee. A) Banker’s acceptance B) Float C) A direct send D) Lockbox ANSWER B
What is the name of the ratio of a price level at one point in time to the price level in a designated base year? A) bid-ask spread B) reserve requirement C) percent spread D) price index ANSWER Answer: D
