You Are Going to Place an Order with a New

question 279

Multiple Choice

You are going to place an order with a new supplier. You have been offered terms of 2/10 net 60 from the date your supplies are shipped. The cost of borrowing from your bank is 16 percent (annual rate) . What is the best course of action in paying the supplier?

• A)Pay as soon as you receive supplies.
• B)Pay on the 10th day after receiving supplies.
• C)Pay on the 11th day after receiving supplies.
• D)Pay on the 60th day after receiving supplies.

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Definitions:

Concentrating Investment

Allocating a significant portion of an investment portfolio to a single investment or a small group of investments, increasing potential risk and return.

Systematic Risk Principle

The concept that the overall market or economy has inherent risks that affect all investments to some degree, and these risks cannot be eliminated through diversification.

Variance

A measure of the dispersion or spread of a set of data points or investment returns, reflecting how much the data points differ from the mean.

Beta

A metric that evaluates the degree of fluctuation in a stock's price against the broader market.