QUESTION 2 Indicate if the following is True or False: 2.1. V2.2. V2.3. 2.4. 2.5. 2.6. 2.7. 2.8. 2.9. 2.10. 2.11. 2.12. 2.13. 2.14. 2.15. The conditions under which a firm sells its goods and services for cash or credit are called the payables policy. The procedures followed by a firm for ensuring payment on its accounts receivables are called its disbursement policy. The terms of sale generally include all of the following: discount period, credit period, cash discount, and the type of credit instrument. 2/5, net 15 means that if you pay within 2 to 5 days, you will receive a 15 per cent discount. ne The stated interest payment in rand made on a bond each period is called the bond's coupon rate. The rate of return required by investors in the market for owning a bond is called the yield to maturity. The trust deed is a written agreement between the company and the lenders of money. A call provision allows the holder to force the issuer to buy the bond back at a stated price. Credit ratings are forward-looking opinions about credit risk. A sinking fund is an account managed by the bond trustee for the purpose of repaying the bonds. E positive covenant is "thou shalt not". Liquidity is a precautionary motive for holding cash. Given the change in interest rates, the price of longer-maturity securities will change more than those of shorter-maturity securities. Opportunity costs are the lost sales from refusing credit. Credit analysis is the process of determining the probability that the customers will not pay. QUESTION 3 Briefly discuss the five basic factors to consider when evaluating credit policy. ld [15] [5]

Indicate if the following is True or False: 2.1. The conditions under which a firm sells its goods and services for cash or credit are called the payables policy. 2.2. The procedures followed by a firm for ensuring payment on its accounts receivables are called its disbursement policy. 2.3. The terms of sale generally include all of the following: discount period, credit period, cash discount, and the type of credit instrument. 24. 2/5, net 15 means that if you pay within 2 to 5 days, you will receive a 15 per cent discount Tou. 2.5. The stated interest payment in rand made on a bond each period is called the bond's coupon rate. 2.6. The rate of return required by investors in the market for owning a bond is called the yield to maturity 2.7. The trust deed is a written agreement between the company and the lenders of money. 2.8. A call provision allows the holder to force the issuer to buy the bond back at a stated price. 2.9. Credit ratings are forward-looking opinions about credit risk 2.10. A sinking fund is an account managed by the bond trustee for the purpose of repaying the bonds. 2.11. A positive covenant is "thou shait not", 2.12. Liquidity is a precautionary motive for holding cash. 2.13. Given the change in interest rates, the price of longer-maturity securities will change more than those of shorter-maturity securities. 2.14. Opportunity costs are the lost sales from refusing credit. 2.15. Credit analysis is the process of determining the probability that the customers will not pay. QUESTION 3 Briefly discuss the five basic factors to consider when evaluating credit policy