The book is (Foundations of Financial Management 16th edition)

Complete the following short answers that apply the concepts in chapter 8. Please read the textbook and study the lecture to answer questions. You can submit the answers in a Word document to the course assignments.

1. Under what circumstances would it be advisable to borrow money to take a cash discount?

2. What is the prime interest rate? How does the average bank customer fare in regard to the prime interest rate?

3. What advantages do compensating balances have for banks? Are the advantages to banks necessarily disadvantages to corporate borrowers?

4. What are the advantages of commercial paper in comparison with bank borrowing at the prime rate? What is a disadvantage?

5. Briefly discuss three types of lender control used in inventory financing.