6-40 Factoring Involves

question 9

Multiple Choice

6-40 Factoring involves

• A)making loans to customers that depository institutions find too risky to lend.
• B)providing financing for the purchase of products manufactured by the parent company.
• C)accepting collateral that depository institutions do not find acceptable.
• D)providing financing through equipment leasing.
• E)purchasing of accounts receivable by finance company from corporate customers.

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Definitions:

Period

A span of time during which certain events or conditions exist or take place, often used in reference to financial reporting, investment intervals, or cycles.

Cross Hedging

The practice of hedging risk by using a contract that is correlated with, but not identical to, the actual underlying asset or liability.

Commodity

A basic good used in commerce that is interchangeable with other goods of the same type, often traded on futures exchanges.

Futures Contract

A contract to purchase or sell a specified commodity or financial instrument at an agreed-upon price at a future date.