What Do We Call Companies That Provide Short-Term Financing to Firms

question 24

Multiple Choice

What do we call companies that provide short-term financing to firms by purchasing accounts receivable at a discount?

• A) credit agents
• B) investment bankers
• C) commercial paper houses
• D) factors

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Definitions:

Potential Investors

Individuals or entities that may consider investing capital into a business, project, or security.

Tranches

Tranches are divisions or portions of debt or securities designed to divide risk or group characteristics in a way that is appealing to different investors.

CDO Cash Flows

Refers to the cash flows associated with Collateralized Debt Obligations, a type of structured asset-backed security segmented by different risk levels.

Higher-risk Tranches

Segments of a debt instrument (like a mortgage-backed security) that have a greater risk of default but offer higher returns to compensate.