Shanklin Inc

question 6

Multiple Choice

Shanklin Inc.purchases merchandise on terms of 2/15,net 40,and its total gross purchases (i.e.,purchases before taking off the discount) are $800,000 per year.What is the maximum amount of costly trade credit Shanklin could get,assuming it abides by the supplier's credit terms? (Assume a 365-day year.)

• A)$53,699
• B)$56,384
• C)$59,203
• D)$62,163

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Definitions:

Correlation Coefficient

A statistical measure that calculates the strength of the relationship between the relative movements of two variables.

Standard Deviation

A measure of the dispersion or variability of a set of data points or investment returns, indicating the degree of risk.

Portfolio

A collection of various investments held by an individual, company, or financial institution.

Risky Bond Portfolio

A collection of bonds with higher default risk, which may offer higher yields in compensation for the increased risk of loss.