The interest rate charged to AAA corporate borrowers is 7.8% for 5 year bonds. The interest rate charged to BBB corporate borrowers is 8.8% for five year bonds. The differences between these two rates of interest can best be explained by the following factors.

a Inflation and Maturity Risk

b Maturity Risk and Default Risk

c Default Risk and Liquidity Risk

d Liquidity Risk and Inflation

e Inflation and Default Risk

Q.288Â Extending the time which a firm takes to pay its trade credit has the effect of:

a Increasing the opportunity cost of using trade credit

b Has no effect on the opportunity cost of using trade credit

c Decreases the opportunity cost of using trade credit

d Reducing the firm’s reliance on trade credit

e None of the above describe the effect of extending the time for which a firm takes to pay its trade credit

Q.322 Ratios are useful for all of the following reasons, except:

a Ratios standardize numbers and facilitate comparisons

b Ratios are used to highlight weaknesses and strengths.

c Ratios help to create projections.

d Ratios help to track individual sales opportunities

e All of the these are reasons that ratios are useful