Which of the Following Statements Is Correct

question 53

Multiple Choice

Which of the following statements is correct?

• A)An inventory blanket lien gives the lending institution a lien against all of the borrower's inventories. However, the borrower must maintain a base inventory as collateral equal to the level that existed when the loan was granted.
• B)A disadvantage of trust receipt financing is the requirement that a trust receipt be issued for specific goods. As a result of this inconvenience, warehousing has become popular as a method of securing loans with inventory.
• C)The fixed costs of a field warehousing arrangement are relatively small and, thus, many small firms make such arrangements.
• D)The use of inventory financing, especially field warehouse financing, as a source of funds for firms has the advantage of small fixed costs but the disadvantage of a lack of spontaneous growth of funds as inventories increase.

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