Assuming That We Can Earn a 13

question 26

Multiple Choice

Assuming that we can earn a 13.5% return on accounts receivable, which of the following actions to finance an increase in our accounts receivable balance would be optimal?

• A) a reduction in marketable securities which are earning a return of 14.2%
• B) a decrease in inventories which are earning a 17.6% return
• C) an increase in bank loans that would cost us 11.5%
• D) an increase in accounts payable that would cost our firm 15%

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Definitions:

Lawrence Kohlberg

A renowned psychologist from the United States, famous for developing a theory on the stages of moral development.

Punished

The imposition of a penalty as retribution for an offense, or the treatment received as a consequence of an action.

Preconventional Morality

A stage in moral development where an individual's sense of morality is externally controlled, based primarily on consequences of actions.

Lawrence Kohlberg

was a psychologist known for his theory of moral development, which proposed stages through which individuals progress in their ethical and moral reasoning as they age.