Why would a business pay premiums to an insurance company?

Select an answer:

• The premium is "insured" to return a set interest rate.

• The premium paid to insurance companies is tax-free.

• Insurance companies shift risk from the business to themselves.

• Insurance companies provide a greater rate of return on investments.

How did the Asset-Backed bond market contribute to the global recession in 2008?

Select an answer:

• Not enough bonds were being purchased from companies that needed financing.

• The assets backing the bonds were so strong that the money received was less than the assets' value.

• The assets backing the bonds were not as strong as purchasers expected them to be.

• More bonds were being purchased than the issuers could make payments on.

When you are managing receivables, which balance must you establish if you extend credit to avoid lost opportunities from having insufficient cash?

Select an answer:

• You must balance increased sales with the cost of bad debts and lost use of money.

• You must balance inventory levels with customer purchase needs.

• You must balance providing credit to customers with increased accounts payable.

• You must balance the limited amount of cash with investment opportunities.

How can you best describe the "operating cycle"?

Select an answer:

• The operating cycle is the conversion from inventory to receivables to cash.

• The operating cycle is the method of billing customers for sales and collecting cash.

• The operating cycle is the lead time between placing orders with vendors and receiving the product.

• The operating cycle is the timeframe a company uses when creating its statement of cash flows.