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FIN3702 June/July 2021 Exam Paper
SECTION A: MULTIPLE-CHOICE QUESTIONS
1. A lockbox plan is most beneficial to firms that have ...
1. widely dispersed manufacturing facilities.
2. customers who operate in many different parts of the country.
3. a large marketable securities portfolio to protect.
4. suppliers who operate in many different parts of the country.
2. Which one of the following statements is most consistent with efficient inventory management?
The firm has a ...
1. relatively low accounts receivables period.
2. relatively high current ratio.
3. below average inventory turnover.
4. low incidence of production schedule interruptions.
3. Which of the following statements is CORRECT?
1. 1. A conservative financing policy is one where the firm finances part of its fixed assets with
short-term capital and all its net working capital with short- term funds
2. 2. If a company receives credit under terms of 2/10 net 30, this implies that the company has
10 days of free trade credit
3. 3. Accruals are an expensive but commonly used way to finance working capital
4. 4. If a firm has a relatively aggressive current asset financing policy compared to other firms in
its industry, then its current ratio will probably be relatively high
4. Which of the following is NOT commonly regarded as being a credit policy variable?
1. credit period
2. cash discounts
3. credit standards
4. accounts payable period
5. A bank lends a firm R750 000 for one year at 9% on a discount basis and requires compensating
balances of 10% of the face of the loan. The effective annual rate associated with this loan is ...
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