FM2 - short financing

Which of the following is NOT a common source of short-term financing?

• Trade credit

• Long-term loans

• Bank overdrafts

• Commercial paper

A bank overdraft is an example of:

• Equity financing

• Long-term financing

• Short-term financing

• Debt financing

Commercial paper is:

• A type of long-term bond

• An equity security issued by corporations

• A short-term promissory note issued by corporations

• A type of trade credit

Which short-term financing option provides immediate cash to a company by selling its accounts receivable to a third party at a discount?

• Factoring

• Commercial paper

• Bank overdraft

• Trade credit

Trade credit refers to:

• Loans obtained from banks

• Purchasing goods or services on account without immediate payment

• Selling accounts receivable to a third party

• Issuing short-term bonds to investors

Which short-term financing option involves a company borrowing directly from a financial institution with a predetermined credit limit?

• Commercial paper

• Factoring

• Bank line of credit

• Trade credit

A revolving credit agreement allows a company to:

• Borrow a fixed amount for a specific term

• Borrow and repay funds up to a predetermined credit limit

• Borrow funds without any interest charges

• Obtain financing from multiple lenders simultaneously

Which of the following is a characteristic of short-term financing?

• Typically involves repayment over several years

• Used to finance long-term investments

• Generally has lower interest rates compared to long-term financing

• Usually involves smaller loan amounts and shorter repayment periods

Which short-term financing option involves selling excess inventory to a third party with an agreement to repurchase it at a later date?

• Factoring

• Inventory financing

• Commercial paper

• Trade credit

Which short-term financing option is commonly used by large, creditworthy corporations to raise funds directly from investors?

• Bank line of credit

• Factoring

• Commercial paper

• Trade credit