Questions from Financial Management


Q: Under what circumstances would it be advisable to borrow money to take

Under what circumstances would it be advisable to borrow money to take a cash discount?

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Q: What advantages do compensating balances have for banks? Are the advantages

What advantages do compensating balances have for banks? Are the advantages to banks necessarily disadvantages to corporations?

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Q: A borrower is often confronted with a stated interest rate and an

A borrower is often confronted with a stated interest rate and an effective interest rate. What is the difference, and which one should the financial manager recognize as the true cost of borrowing?

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Q: What are the advantages of commercial paper in comparison with bank borrowing

What are the advantages of commercial paper in comparison with bank borrowing at the prime rate? What is a disadvantage?

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Q: Briefly discuss three types of lender control used in inventory financing.

Briefly discuss three types of lender control used in inventory financing.

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Q: What is meant by hedging in the financial futures market to offset

What is meant by hedging in the financial futures market to offset interest rate risks?

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Q: Discuss the relative use of credit between large and small firms.

Discuss the relative use of credit between large and small firms. Which group is generally in the net creditor position, and why?

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Q: How have new banking laws influenced competition?

How have new banking laws influenced competition?

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Q: What is the prime interest rate? How does the average bank

What is the prime interest rate? How does the average bank customer fare in regard to the prime interest rate?

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Q: What does LIBOR mean? Is LIBOR normally higher or lower than

What does LIBOR mean? Is LIBOR normally higher or lower than the U.S. prime interest rate?

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