What Happens to the Implied Interest Rate on Trade Credit

question 90

Multiple Choice

What happens to the implied interest rate on trade credit as the time interval between the discount period and payment period is decreased?

• A) The rate declines.
• B) The rate increases.
• C) The rate remains constant.
• D) It is impossible to predict without knowing the actual length of discount period.

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Definitions:

Factor Analysis

A statistical method used to identify underlying variables, or factors, that explain the pattern of correlations among multiple observed variables.

Personality Traits

Enduring characteristics or habitual patterns of behavior, thought, and emotion that are relatively stable over time and across situations.

Gordon Allport

An American psychologist known for his trait theory of personality, which categorized human personality into cardinal, central, and secondary traits.

Psychoanalytic Theory

A theory of personality and psychological disorder that emphasizes unconscious motives and conflicts, originated by Sigmund Freud.