Which of the Following Strategies Would Continue to Be Effective

question 78

Multiple Choice

Which of the following strategies would continue to be effective if a cash-strapped firm determines that the effective interest rate charged on trade credit is lower than the bank's interest rate?

• A) Take the discount but pay after the discount period.
• B) Borrow from the bank and take the discount.
• C) Ignore the discount, pay at the end of the period.
• D) Take the discount and hope for longer payment float.

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Definitions:

Addition Rule

A principle in probability and statistics that calculates the likelihood of any of multiple mutually exclusive events occurring.

Probabilities

The probability of an event happening, expressed numerically between 0 and 1, indicating the event's chance.

Null Hypothesis

A baseline assumption that suggests no significant effect or difference exists, serving as the initial point for conducting tests on statistical significance.

Sample Mean

The average value of a set of numbers, calculated by summing them all up and then dividing by the count of these numbers.