QUESTION 19

The main longer-term finance provided by financial intermediaries is/are:

certificates of deposit.

commercial paper.

corporate bonds.

term loans.

QUESTION 18

A bill of exchange differs from a promissory note in that:

only promissory notes have an active secondary market.

a promissory note is a short-term instrument, whereas a bill of exchange is not necessarily short-term.

there is generally an issuer and an acceptor for a bill of exchange, whereas there is no acceptor involved for a promissory note.

bills of exchange are only used for trade transactions.

QUESTION 17

Which of the following statements about the issuing of bills of exchange is NOT correct?

Bills of exchange are sold at a discount to face value.

A bank may accept a bill of exchange.

The drawer is the party that issues the bill of exchange.

The discounter is the party that borrows the funds.

QUESTION 16

An invoice with the following terms 1/20, n/30 translates as:

a 1% cash discount may be taken if paid in 20 days; if no cash discount is taken, the balance is due in 30 days after the middle of the month.

a 1% cash discount may be taken on 20% of the purchase if the account is paid within 30 days after the end of the month.

a 1% cash discount may be taken if paid in 20 days; if no cash discount is taken, the balance is due 30 days after the end of the month.

a 1% cash discount may be taken if paid in 20 days; if no cash discount is taken, the balance is due 30 days after the invoice date.