1.How does the seasonal nature of a firm's sales influence its decision regarding the amount of short-term credit to use in its financial structure.

2. If long-term credit exposes a borrower to less risk, why would people or firms ever borrow on a short-term basis?

3. On average, which group of borrowers would have to pay a higher effective rate for its short-term loans, those who are required to put up collateral or those who are not? Explain.

4. What type of inventory make "good" collateral?