The Cash Discount Terms for a Purchase Worth $1,000 Made

question 141

Multiple Choice

The cash discount terms for a purchase worth $1,000 made on August 1 are 3/10, net 30. How much will the buyer have to pay if he makes the payment on August 7?

• A) $930
• B) $30
• C) $1,030
• D) $1,000
• E) $970

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Definitions:

Compound Return

The total amount of money gained or lost on an investment over a specified period, calculated by taking into account the effect of compounding.

Volatility

The statistical measure of the dispersion of returns for a given security or market index, often associated with the degree of risk involved.

Risk Premium

The additional return an investor demands for taking on additional risk above the risk-free rate.

Expected Rate

The expected rate refers to the forecasted return on an investment or the predicted growth rate of an asset over a specific period.