21. Which of the following securities represents an unsecured promissory note issued by a corporation?

A. Certificates of deposit.

B. Savings accounts.

C. Commercial paper.

D. Money market fund.

22. The corporate sweep account is an account:

A. That allows companies to maintain zero balances, with their excess cash moved into an interest earning account.

B. That allows companies to write checks on zero balance accounts with the understanding that when the check is presented for payment, money will be moved from the interest bearing account to the appropriate payment account.

C. That allows companies to move their lock box collections into an interest bearing checking account.

D. A and B are correct.

23. A multinational company may prefer to hold sizeable cash balances in one currency rather than another because:

A.Of high interest rates existing in one country.

B. One countrys currency may be strong relative to the dollar.

C. Both A and B.

D. None of the above.

24. Which of the following is not a valid quantitative measure for accounts receivable collection policies:

A. Average collection period.

B. Aging of accounts receivables.

C. Ratio of Cash to Sales

D. Ratio of bad debts to credit sales.

25. Which of the following is not a method of speeding up collections?

A. Lockbox system.

B. Regional collection centers.

C. Extended disbursement float.

D. All of the above are methods for speeding up collections.

26. Holland Construction Company has an outstanding 180-day bank loan of $400,000 at an annual interest rate of 9.5%. The Company is required to maintain a a15% compensating balance in its checking account. What is the effective interest cost of the loan?

A. 19.00%

B. 22.35%

C. 11.18%

D. 8.08%