Question

Short term Financing

1) Your firm issues 20-year bonds. This type of financing would be most appropriate for which of the following activities?

A) The support of accounts receivable

B) The construction of a new warehouse

C) The support of accounts payable

D) The financing of inventory

2) Your firm borrows money from the bank on a short-term note due in 9 months. This type of financing would be most appropriate for which of the following activities?

A) The support of accounts receivable

B) The construction of a new warehouse

C) The support of accounts payable

D) The financing of new equity

3) Which of the following is NOT considered a source of short-term financing?

A) a 10-year bond

B) a banker's acceptance

C) a 90-day bank loan

D) an issue of commercial paper

4) ________ is/are the most common form of short-term financing for a small and medium sized firms.

A) Commercial paper

B) Banker's acceptances

C) Short-term bank loans, or promissory notes,

D) New common stock

Answer 1

1.
The construction of a new warehouse

2.
The support of accounts receivable

3.
a 10-year bond

4.
Short-term bank loans, or promissory notes