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- 1. Modes of extinguishing obligations when creditor abandons his right to collect. (PLEASE EXPLAIN YOUR ANSWER) A. Condonation B. Forfeiture C. Debt D. Damages 2. Fall after the increase reaches a certain variable amount, this is called: (PLEASE EXPLAIN YOUR ANSWER) A. Process factor B. Law of return C. Inflation D. Supply & demand 3. It is always true that the effective rate is greater than the nominal rate when m ≥ 2. (PLEASE EXPLAIN YOUR ANSWER) A. True B. False 4. (A/F, i%, N) = (A/P, i%, N) + i (PLEASE EXPLAIN YOUR ANSWER) A. True B. FalseIf we hold all other factors the same, an increase in interest rates will: a. Decrease the present value of a stream of constant payments we expect to receive. b. Increase the present value of a stream of constant payments we expect to receive. c. Decrease the interest revenue that a company will earn on its funds that it holds in its interest-bearing checking account. d. No impact on how much a company should be willing to pay for factory equipment that is expected to significantly reduce the factory electricity costs.Δ%(MV) = -MD*Δr When we use this equation to evaluate a loan, this equation does not totally reflect the change in the present value of loans mainly because of the ignorance of which of the following factors a. Convexity b. Maturity c. Duration d. Immunization
- 19. What is the effect of the lender's increasing the loan's interest rate just before closing A. The borrower has to pay it. B. Closing will be delayed. C. The borrower can choose to pay extra points. D. The real estate licensee is expected to pay the extra points.TRUE OR FALSE 1. Short-term financial policies that are flexible with regard to current assets includes keeping large balance of short-term debt. 2. Costs that fall with increases in the level of investment in current assets are called shortage costs. 3. The firm further increases the effective interest rate earned by the bank on the committed line of credit.5. Sources of short-term financing Short-term credit, or short-term financing, is any liability that is scheduled for repayment within one year. Sources of short-term funds include banks, suppliers, securities firms, and insurance companies. The obligations are in the form of bank loans, trade credit, commercial paper, secured loans, and accruals. Some types of short-term financing are easier to obtain and manage than others. Financial managers will consider the costs of the various sources of financing as part of a cash management strategy. The following statement refers to a source of short-term credit. Select the best term to complete the sentence. as a source of financing is restricted to large firms with exceptionally good credit. The use of Newell Enterprises is a very large manufacturing company. Newell's financial managers use many sources of financing for the company's annual borrowings, which exceed $100 million. Newell's credit rating is excellent. At the moment, the…
- Which of the following statements regarding fixed-rate loans is true? Group of answer choices a. Fixed-rate loans are preferable if interest rates are expected to rise. b. The cost of fixed-rate loans increases with an increase in the market interest rate. c. The cost of fixed-rate loans decreases with a decrease in the market interest rate. d. Fixed-rate loans are preferable if interest rates are expected to fall. e. Fixed-rate loans have periodic adjustment dates, at which time the interest rate and monthly payment are adjusted as necessary.LLCR (Loan Life Coverage Ratio)tells the banker if there is enough cash from the project to make bridge-financing even when some years are expected to have inadequate cashflows to service the debt. a.The information given above is not sufficient to judge b.Uncertain c.True d.FalseWhich of the following statement is incorrect? *a. Trade payable are classified as current liabilities when they are expected to be settled within the normal operating cycle or one year, whichever is shorterb. Non-trade payables are classified as current liabilities only when they are expected to be settled within one yearc. Financial institutions need not classify their payables as trade or non-trade because their statement of financial position is presented based on liquidityd. A and B
- Which of the following are characteristics of consumer closed credit (installment debt)? 1. generally the loan is larger than what is available with revolving credit 2. flexibility in the amount and timing of the debt repayment 3. the loan repayment is often fully amortized 4. the interest rate on a collateralized installment loan is typically lower than the interest rate on unsecured revolving credit 5. if the loan is paid before the grace period, then no interest applies 1 and 2 O 2, 4 and 5 O 1, 3 and 4 O 3 and 4What is the advantage of a variable-interest loan? Protects the borrower from rising interest rates Borrower can capitalize on a reference rate decrease Makes it easier for the borrower to plan for future payments Reduces the total interest payments Which of the following tools is used to analyze the industry attractiveness in the credit application process? PESTEL analysis Management analysis Ratios analysis SWOT analysisInterest prepaid by the buyer, which may be used to reduce the stated interest rate the lender charges, are known as ▼ margins. points. payment caps. variable investments.
