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31) In exchange for the tailor-made maturity date provided by

Question : 31) In exchange for the tailor-made maturity date provided by : 1415285

 

31) In exchange for the tailor-made maturity date provided by the repurchase agreement, a bank or security dealer provides a return slightly below than obtainable through outright purchase of similar marketable securities.

32) The higher yields on Eurodollar deposits compared with nearly all other marketable securities, governmental or nongovernmental, with similar maturities are attributable to (1) the fact that the depository banks are generally less closely regulated than U.S. banks and are therefore more risky, and (2) some foreign exchange risk may be present.

33) 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 when a firm has adequate funds to meet its liabilities

34) 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

35) 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 to remind him about his dues

36) ________ 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

37) ________ float is the delay between the receipt of a check and the actual deposit of it into a firm's account.

A) Disbursement

B) Deposit

C) Processing

D) Clearing

38) Float is important in the cash conversion cycle of a firm because ________.

A) its presence reduces a firm's average collection period

B) its presence reduces a firm's average payment period

C) its presence lengthens both a firm's average collection period and its average payment period

D) its presence reduces the investment that a firm must make in its cash conversion cycle

39) A firm has arranged for a lockbox system to reduce collection time of accounts receivable. Currently the firm has an average collection period of 43 days, an average age of inventory of 50 days, and an average payment period of 10 days. The lockbox system will reduce the average collection period by 3 days by reducing processing, mail, and clearing float. The firm's cash conversion cycle ________.

A) increases by 3 days

B) decreases by 3 days

C) increases by 6 days

D) decreases by 6 days

40) The Solar Inc. has daily cash receipts of $90,000. A recent analysis of its collections indicated that customers' payments were in the mail for an average of 4 days. Once received,the payments are processed in one and a half days. After payments are deposited, it takes an average of two and a half days for these receipts to clear the banking system. If the firm's opportunity cost is 11%, would it be economically advisable for the firm to pay an annual fee of $8,000 to reduce collection float by 2 days?

A) Yes, because it would only cost $8000 to save $19,800, netting the company $11,800.

B) Yes, because it would only cost $8000 to save $59,400, netting the company $51,400.

C) No, because it would cost $8000 to save $880, netting the company -$7,120.

D) Yes, because it would only cost $8000 to save $9,900, netting the company $1,900.

 

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