Which of the Following Is True Concerning Transfer Mechanisms

question 91

Multiple Choice

Which of the following is true concerning transfer mechanisms?

• A) The firm must choose the mechanism that offers the highest earnings on the increased funds' availability.
• B) The firm must choose the mechanism that offers the lowest costs.
• C) The firm must balance the marginal costs vs.the marginal benefits and select the one with the highest marginal profit.
• D) In practice,most companies use wire transfers for large transfers of funds from lockbox systems and EDTs for high-volume,low-dollar transfers from small deposit banks.
• E) Both (c)and (d)are true.

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Definitions:

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, commonly considered the yield of government bonds like T-bills.

Expected Market Rate

The average rate of return anticipated by market participants, based on forecasts and historical trends.

Expected Rate of Return

The anticipated amount of profit or loss an investment generates, expressed as a percentage of the initial investment amount.