Factoring Is a Form of Short-Term Financing Which Involves [Blank]

question 4

Multiple Choice

Factoring is a form of short-term financing which involves [blank].

• A)actually selling accounts receivable to a financial institution at a discount from face value
• B)pledging accounts receivable as collateral for a short-term loan
• C)using a percentage of current assets as collateral for a short-term loan
• D)selling inventory to a factor with an agreement to repurchase it at a set time in the future

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Definitions:

Opportunity Cost

The cost of foregone alternatives when a choice is made, representing the benefits that could have been received by taking an alternative action.

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than its competitors.

Absolute Advantage

Refers to the ability of a country, individual, or firm to produce a good or service more efficiently than its competitors, using the same amount of resources.

Fair Trade

An organized movement that aims to help producers in developing countries achieve better trading conditions and promote sustainability.