Which of the Following Is an Example of a Factoring

question 165

Multiple Choice

Which of the following is an example of a factoring agreement?

• A) Selling an individual account receivable to a bank
• B) Selling financial securities that are collateralized by accounts receivable
• C) Pledging an single large account receivable to a bank
• D) Assigning a group of accounts receivable as collateral for a loan

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Definitions:

Monthly Interest Rate

The interest rate for a loan or financial product recalculated on a monthly basis.

Variable Cost

Expenses that change in proportion to the activity of a business such as raw materials and labor costs.

Net Present Value

A calculation that compares the present value of all cash inflows and outflows of a project or investment using a specific discount rate.

One-Shot Approach

A method or strategy executed with a single attempt, without the prospect of repetition.