The Services Provided by an Accounts Receivable Factor to the Borrower

question 50

Multiple Choice

The services provided by an accounts receivable factor to the borrower may include:

• A)performing credit checks on potential customers.
• B)collecting cash from customers.
• C)assuming the bad debt risk when customers of factored accounts do not pay.
• D)All of the above

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Definitions:

Investment Swings

Refers to the fluctuations in investment spending on business capital goods, which can be influenced by interest rates, business confidence, and economic conditions.

Rational Expectations Theory

This is based on three assumptions: (1) that individuals and business firms learn through experience to anticipate the consequences of changes in monetary and fiscal policy; (2) that they act immediately to protect their economic interests; and (3) that all resource and product markets are purely competitive.

Adaptive Expectations Theory

An economic theory that assumes individuals form their expectations about the future based on past experiences and gradually adjust as reality unfolds.

Accelerating Inflation Theory

A theory suggesting that inflation will speed up as demand grows and outpaces supply, leading to a continuous increase in price levels.