Questions from Financial Markets

Q: Michael’s Computers’ local bank offers the firm a 12-month revolving

Michael’s Computers’ local bank offers the firm a 12-month revolving credit agreement of $500,000. The APR of the revolver is 12 percent with a commitment fee of 0.5% on the unused portion. Over the c...

Q: 1. The relationship between interest rates and the time to maturity

1. The relationship between interest rates and the time to maturity for debt instruments of comparable quality is called which of the following? a. Default risk premium b. Liquidity premium c. Term...

Q: Bank Two wants to attract Michael’s Computers, Inc. to become

Bank Two wants to attract Michael’s Computers, Inc. to become a customer. Their sales force contacts Michael’s and offers them line of credit financing. The credit line will be for $500,000 with a one...

Q: Montcalm Enterprises is seeking bids on short-term loans with area

Montcalm Enterprises is seeking bids on short-term loans with area banks. It expects its average outstanding borrowings to equal $320,000. Which of the following terms offers Montcalm the lowest effec...

Q: Beckheart is seeking financing for its inventory. Safe-proof Warehouses

Beckheart is seeking financing for its inventory. Safe-proof Warehouses offers space in their facility for Beckheart’s inventory. They offer loans with a 15-percent APR equal to 60% of the inventory....

Q: CDRW is evaluating an inventory financing arrangement with DVD Banks. CDRW

CDRW is evaluating an inventory financing arrangement with DVD Banks. CDRW estimates an average monthly inventory balance of $800,000. DVD Bank is offering a 12 percent APR loan on 75 percent of the v...

Q: Which of the following offer the lowest effective rate for Wolf Howl

Which of the following offer the lowest effective rate for Wolf Howl jackets? Assume Wolf Howl will need to borrow $800,000 for 180 days. a. A 14% APR bank loan b. A 13% APR, discounted bank loan. c....

Q: Assume that you have been offered cash discounts on merchandise that can

Assume that you have been offered cash discounts on merchandise that can be purchased from either of two suppliers. Supplier A offers trade credit terms of 3/20, net/70, while Supplier B offers 4/15,...

Q: Comfin Company has the following estimates on its level of current and

Comfin Company has the following estimates on its level of current and total assets for the next two years (presented in text): a. Estimate the levels of permanent and temporary current assets for Com...

Q: Obtain a current issue of the Federal Reserve Bulletin, or review

Obtain a current issue of the Federal Reserve Bulletin, or review of copy from the Fed’s Web site (www.federalreserve.gov) or the St. Louis Fed’s Web site (www.stlouisfed.org), and determine the chang...