BUSI 320 Read & Interact Block, Hirt, & Danielsen Chapter 8 solutions complete answers

BUSI 320 Read & Interact Block, Hirt, & Danielsen Chapter 8 solutions complete answers

 

Selling a Treasury bond futures contract will result in a profit if interest rates go down.

 

Jones Company accepts credit cards resulting in outright sale of receivables to credit card company. Which of the following is true regarding this arrangement?

 

When a firm has a high credit rating, the lender will usually require collateral to secure the loan.

 

The rate a bank charges to its most creditworthy customers is

 

A 5/10, net 30 cash discount means that the customer will receive a 10% discount if they remit funds 5 days after billing.

 

Failing to pay in time to take the cash discount when the terms are 2/10 Net 30 results in an interest rate of approximately

 

Jones Company is considering changing its credit term from 30 days to 45 days. If daily credit sales are $3,000 and the balance in accounts payable is $120,000, then as a result of this change, the company’s net trade credit position will become:

 

Some advantages of commercial paper are

 

Which one of these is NOT a category of commercial paper?

 

Foreign loan rates are often lower than U.S. loan rates which creates an incentive for US firms to utilize foreign borrowing.

 

Selling a Treasury bond futures a contract will result in a profit if interest rates go down.

 

The method of controlling pledged inventory in which the lender has a general claim on the borrower’s inventory is called a blanket inventory lien.

 

Which is not an example of events that cause lenders in commercial paper market to become risk-averse?

 

The 1968 Truth in Lending Act was intended to protect:

 

      is the center of Eurodollar deposits

 

Goods in process used as collateral typically qualify a firm for a higher loan than raw material or finished goods.

 

Commercial paper represents a long-term, secured promissory note issued to the public in minimum units of $25,000.

 

Bankers can oftentimes be hesitant to allow a term loan to affix to a single rate. Rather, they prefer the interest rate to change with          .

 

Because there are so many ways to structure loan repayment schedules, no one formula is applicable for computing the APR

 

The average customer can expect to pay how many points above the prime rate?

 

Commercial paper may be issued at below the                

 

Jones Company sells his receivables to the bank without recourse. Which of the following are true regarding this arrangement?

 

In the last decade there has been a sharp decline in the use of the term loan

 

The arrangement where goods can only be moved with permission of the lender is called

 

What is the lender's main goal on making a loan?

 

An installment loan usually requires

 

Hedging is used to

 

If a US company borrows funds denominated in a foreign currency and the foreign currency strengthens as compared to the US dollar, the costs to repay the loan will     if repaid in US dollars.

 

A cash discount is usually a discount allowed for:

 

Accounts payable is considered a

 

Jones Corporation is considering borrowing money in a foreign country denominated in the foreign currency and converting it to US funds for use in the USA. What should Jones Co. consider before doing this?

 

The Truth in Lending Act applies to    .

 

The time between the sale and the due date of payment is called

 

A change in credit terms from 1/10 net 30 to net 30 would ____ the effective rate for not taking the cash discount.

 

The prime rate is best described as

 

The assets pledged to secure a loan are called

 

A positive net credit position would indicate that

 

Jones Company borrows $125,000 from First National Bank. The bank requires a 10% compensating balance. Which of the following are true regarding this loan?

 

Which of the following is true regarding blanket inventory liens?

 

Another name for trust receipt financing is

 

Jones Company borrows from the bank, using the accounts receivable as security. Which of the following are true of this situation?

 

If a company has a cash discount policy that allows a 1% discount if paid 10 days and no discount if paid after that, with the total due in 30 days, it would be expressed as

 

 

 
 
 
Failing to pay in time to take the cash discount when the terms are 2/10 net 30 results in an interest rate of app.
 
 
 
Categories of commercial paper include;
 
 
 
As a rule, a cash discount to credit customers will ____ positive cash flow
 
 
 
Jones sells his receivables to the bank without recourse, which of the following are true
 
 
 
during tight money periods most banks___ charge the prime rate
 
 
 
Arrangement where goods can only be moved with permission of the lender
 

 

5.
A cash flow that provides only one payment could be considered an annuity. (True or false)
 
 
7.
A company that has a positive net credit position is considered a ___________ of trade credit.
 
 
8.
Compound interest can be described as:
 
 
9.
A decrease in the interest rate will:
 
 
10.
During tight money periods banks charge _________ the primary rate.
 
 
11.
Expressed in graphical form, the line showing the future value will ___________ if the number of periods increase.
 
 
12.
The factors needed to compute the number of periods are:
 
 
13.
For an annuity, an increase in the number of periods will _________ the present value.
 
 
14.
The future value of an amount is directly proportional to the future interest rates. (True or false)
 
 
16.
An increase in the interest rate will:
 
 
17.
An increase in the number of periods will ____________ the present value of a single sum.
 
 
18.
In order to represent time value relationships in graphical form one must know:
 
 
20.
In time value of money problems, a period could be:
 
 
21.
Jones Company accepts bank credit cards. Which of the following is true regarding this arrangement?
 
 
23.
Jones Company sells his receivables to the bank without recourse. Which of the following are true regarding this statement?
 
 
25.
Of the following, which one would have the lowest collateral value to a bank or lender?
 
 
26.
Of the following, which would have the lowest collateral value to a bank or lender?
 
 
28.
The present value of an annuity is the value today of a series of equal payments to be received in the future:
 
 
30.
To calculate the present value of an annuity:
 
 
31.
To find the present value of a series of equal payments, what table or procedure would you use?
 
 
32.
Trade credit is another name for?
 
 
34.
What factors must be known in order to calculate the current value of an annuity?
 
 
36.
When using the time value tables, the interest factor that is looked up (i.e. PVIF, PFVIFA, FVIF, FVIFA) is then _____________ the dollar amount of the known variable (PV, PMT, or FV)
 
 
37.
Which of the following correctly contrasts an ordinary annuity and an annuity due?
 
 
38.
Which of the following factors affect the calculation of present value?
 
 
40.
Which of the following statements is true regarding the time value of money?
 
 
41.
You plan to invest $2,000 per year for 10 years into an IRA. What will the value of the IRA be at the end of the 10 years if the interest rate is 4% per year? Your answer may vary due to rounding.
 
 
 
 
 
 
 
 
 

 

Jones Co. sells his receivables to the bank with the recourse. Which of the following are true regarding this arrangement?

 

Trade credit is usually extended for

 

During tight money periods most banks charge ______ the prime rate.  

 

As a rule, offing a cash discount to credit customers will _____ positive cash flow.

 

If a company can increase the payment period to a vender is cash flow will ______ .

 

A company that has a higher accounts payable balance than account receivable balance is considered a ______ of trade credit.

 

Jones Company is considering changing its credit term from 30 days to 45 days. If daily credit sales are $3,000, this change would change the company's net credit position by…

 

Another name for the receipt financing is

 

As a rule, offering a cash discount to credit customers will increase positive cash flow

 

The Truth in Lending Act requires

 

The relationship between accounts receivable and accounts payable is called

 

On average, 40% of short-term credit is provided by

 

What are some characteristics of commercial paper?

 

Commercial paper backed by mortgage is a example of

 

The rate charged the most credit worthy customers in London is called