Which of the Following Is NOT an Advantage of Trade

question 64

Multiple Choice

Which of the following is NOT an advantage of trade credit versus a standard loan?

• A)Trade credit reduces a firm's collection float.
• B)The supplier may have more information about the credit quality of the customer than a bank.
• C)Providing financing at below-market rates is an indirect way to lower prices for only certain customers.
• D)If the buyer defaults, the supplier may be able to seize the inventory as collateral.

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Definitions:

Total Expenses

The sum of all costs and expenses incurred by a business or individual in a specified period.

Dividends Declared

The amount of earnings a company decides to distribute to its shareholders as a payout.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, making them partial owners of the company.