A Lockbox System Is Used to Reduce Collection Float by Shortening

question 119

True/False

A lockbox system is used to reduce collection float by shortening all three basic float components (i.e., mail, processing, and clearing).

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Definitions:

CBOE

Chicago Board Options Exchange, the largest options exchange in the world, known for trading options and other securities.

Listed Call Option

An option that gives the holder the right, but not the obligation, to buy a specified amount of an underlying security at a specified price within a specified time period, traded on a formal exchange.

Exercise Price

The cost at which the possessor of an option is able to purchase (in the case of a call option) or dispose of (in the case of a put option) the underlying asset.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall market capitalization remains unchanged.