Which One of the Following Statements Is Correct

question 10

Multiple Choice

Which one of the following statements is correct?

• A) The assignment of receivables involves selling accounts receivables at full price.
• B) Lines of credit frequently require a cleanup period.
• C) With maturity factoring, the borrower receives the loan amount immediately.
• D) Commercial paper is short-term financing offered to highly rated corporations by major banks.
• E) Credit card receivables funding is a relatively inexpensive method of borrowing on a short-term basis.

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Definitions:

Present Value

Present Value refers to the value today of an amount of money that is to be received in the future, adjusted for a certain rate of return.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Dollar Amount

The value of something represented in terms of the currency of the United States, expressed as a quantity of dollars.

Discount Rates

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.