A(n)________ Is a Financial Instrument That Can Be Used to Eliminate

question 106

Multiple Choice

A(n) ________ is a financial instrument that can be used to eliminate the effect of both favorable and unfavorable price movements.

• A)convertible securities
• B)call option
• C)put option
• D)futures contracts

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Definitions:

Factoring

A financial transaction where a business sells its accounts receivable to a third party at a discount to raise immediate capital.

Turning Receivables

Involves managing and collecting funds owed to a business by its customers within a given period.

Credit Profile

A summary or analysis of an individual's or entity's credit history and current financial status used by lenders to gauge creditworthiness.

Trade Creditors

Suppliers or vendors that allow businesses to buy goods or services on account, paying them at a later date.