Which One of the Following Statements Generally Applies to the Credit

question 314

Multiple Choice

Which one of the following statements generally applies to the credit period?

• A) The larger the account size, the longer the credit period.
• B) The greater the competition, the shorter the credit period.
• C) The more perishable a product, the longer the credit period.
• D) The higher the demand for a product, the longer the credit period.
• E) The lower the cost of an item, the longer the normal credit period.

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Definitions:

Dividend Increases

An action by a company to increase the amount of dividends paid out to shareholders, usually as a result of increased profitability.

Cost of Equity

The return a firm theoretically pays to its equity investors, i.e., shareholders, as a reward for investing their capital.

Risk Level

The degree of uncertainty associated with an investment's returns, reflecting the potential for loss or lower than expected performance.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often used in capital budgeting.