A Firm's Credit Terms Specify "1/10 Net 30" and the Accounts

question 111

Multiple Choice

A firm's credit terms specify "1/10 net 30" and the accounts receivable days outstanding is 32 days.Which of the following can be concluded on the basis of this information?

• A)Most customers pay on time.
• B)The average customer pays two days late.
• C)All customers have paid within 32 days of purchase.
• D)All customers pay late.
• E)No customers have paid within 32 days of purchase.

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Definitions:

Standard Deviation

A statistical index that measures how much data values deviate from each other within a dataset.

Beta Coefficient

A measure of a stock's volatility in relation to the overall market; a higher beta indicates greater volatility.

Portfolio

A range of investments held by a person or organization, diversified across asset classes, instruments, or sectors, to manage risk and return.

CAPM

Capital Asset Pricing Model; a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.