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A producer of specialty electronic components is located in Arkansas while many of its customers are located in California Texas, and Florida This company

 

 

30.A producer of specialty electronic components is located in Arkansas, while many of its customers are located in California, Texas, and Florida. This company may seek to use

a.electronic invoice presentment and bill paying.

b.lock boxes.

c.concentration banks.

d.all of the above.

 

 

 

31.The benefit(s) of a lock box system include

a.reduction of mail float.

b.reduction of processing float.

c.reduction of availability float.

d.all of the above.

 

 

 

32.In which situation below would a lock-box system likely produce greater benefits?

a.when interest rates are very low

b.when interest rates are very high

c.when the firm’s customers are concentrated locally

d.when the firm collects with ACH transfers

 

 

 

33.Extending payment beyond the due date in order to reduce the cash conversion cycle

a.is an accepted “stretching” of credit terms.

b.is an unethical cash management practice.

c.is an unethical cash management practice, but can be viewed as acceptable.

d.is backwards; this actually increases the cash conversion cycle.

 

 

 

34.The purpose of a “positive pay” service is to

a.reduce availability and clearing float

b.only clear checks when a firm’s cash balance is positive.

c.reduce a firm’s exposure to check fraud.

d.move funds to into a zero balance account.

 

 

 

35.Place the following in the correct order of priority for selecting short-term investments:

a.expected return, liquidity, preservation of capital

b.expected return, preservation of capital, liquidity

c.liquidity, expected return, preservation of capital

d.preservation of capital, liquidity, expected return

 

 

 

36.For which of the following would missing (that is, not taking) the discount be the least costly?

a.2/10 net 40

b.1/15 net 60

c.3/10 net 70

d.1/10 net 50

 

 

 

37.Suppose your firm can borrow at 10%. Which of the following discounts should your firm take?

 

I.2/10 net 30

II.1/15 net 60

III.3/10 net 70

IV.1/10 net 45

 

a.II only

b.I and III

c.II and IV

d.I, III, and IV

 

 

 

38.Which of the following credit terms has the highest relevant cost?

a.3/10 net 60

b.2/10 net 30

c.2/15 net 45

d.4/15 net 90

Feb 13 2020 View more View Less

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