Your fiRm Receives 30 Cheques from Customers on an Average

question 255

Multiple Choice

Your firm receives 30 cheques from customers on an average day. These cheques, on average, are worth $45 each, and are processed and clear the bank in 5 days. In addition, your firm mails out 20
Cheques a day with an average amount of $42. These cheques clear your bank in 4 days. What is
The average amount of the collection float?

• A) $3,360
• B) $3,390
• C) $6,750
• D) $7,240
• E) $10,110

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Definitions:

Weak Form

In financial market theory, this term refers to the hypothesis that asset prices fully reflect all historical price information, arguing that past price movements are not predictive of future prices.

Market Efficiency

A concept describing the extent to which stock prices reflect all available, relevant information, making it impossible to consistently achieve higher returns.

Semi-strong Form

A form of the Efficient Market Hypothesis that asserts all public information is reflected in the stock prices.

Market Efficiency

Market efficiency is a concept where all available information is already reflected in asset prices, implying that assets are priced perfectly and it is impossible to "beat the market" through expert stock selection or market timing.