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Compensating Balance Quiz

Under COD terms, the seller:

The type of business most likely to use trust receipt financing would be:

The trade terms "2/15, net 30" indicate that:

If credit terms of "2/10, net 40" are offered, the approximate cost of not taking the discount and paying at the end of the credit period would be closest to which of the following? (Assume a 365-day year.)

If a discount date is missed for some reason, when should a rational manager pay the bill?

If MetroPulse Media receives an invoice for purchases dated 10/21/X5 subject to credit terms of "3/10, net 30 EOM," what is the last possible day the payment should be made (1) if the discount is taken and (2) if the discount is not taken?

When a firm needs short-term funds for a specific purpose, the bank loan will likely be a:

Inventory is in the possession of a third party under which of the following methods?

The Houser Company has negotiated a $500,000 revolving credit agreement with Chitwood National Bank. The agreement calls for an interest rate of 10% on fund used, a 15% compensating balance, and a commitment fee of 1% on the unused amount of the credit line. Assuming that the compensating balance would not otherwise be maintained, the effective annual interest cost if the firm borrows $200,000 for one year is closest to

The type(s) of collateral generally used for a secured short-term loan is(are) .

Tagged as: compensating balance, compensating balance, term
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