ABC Corp Extends Credit Terms of 45 Days to Its Customers

question 171

Multiple Choice

ABC Corp. extends credit terms of 45 days to its customers. Its credit collection would likely be considered poor if its average collection period was

• A) 30 days.
• B) 36 days.
• C) 47 days.
• D) 57 days.

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Definitions:

Conversion Price

The predetermined price at which convertible security can be exchanged for another asset, often shares of the issuing company's stock.

Coupon

The annual interest rate paid on a bond, expressed as a percentage of the face value, and paid from issue date until maturity.

Conversion Premium

The additional cost over the current market value of a convertible security that an investor pays to have the option to convert it into a set number of shares.

Conversion Price

The predetermined price per share at which a convertible bond or preferred stock can be converted into common stock.