A company's investment in accounts receivable is determined by ...

[rlane42]

A company's investment in accounts receivable is determined by the company's level of sales,
  percent of credit sales to total sales, and credit and collection policies.
 
  Indicate whether the statement is true or false

Question 2

List and describe at least three advantages accrue to the user of commercial paper.
 
  What will be an ideal response?

Question 3

George wants to pick a stock for his Diversified Hedge Fund. The fund has holdings in every country with a stock market. George is trying to decide which asset he should add to his portfolio: Stock A or Stock B.
 
  Expected return, Standard deviation and beta values for the two stocks are outlined in the table below. Which stock is best for George's portfolio and why?
 
   Stock A Stock B Risk-Free Asset
  Expected Return 8 12 5
  Standard Deviation 12 22
  Beta 1 2
 
  A) Stock A because it has a lower Beta.
  B) Stock A because it has more return per unit of standard deviation.
  C) Stock B because it has a higher return.
  D) Stock B because it has a higher Treynor Index with respect to standard deviation.
  E) Stock B because it has a higher Treynor Index with respect to Beta.

[karmakat49]

Answer to Question 1

TRUE

Answer to Question 2

1. Interest rate: commercial paper rates are generally lower than rates on bank loans and comparable sources of
short-term financing; 2. Compensating-balance requirement: no minimum balance requirements are associated with
commercial paper. However, issuing firms usually find it desirable to maintain line-of-credit agreements sufficient to
back up their short-term financing needs in the event that a new issue of commercial paper cannot be sold or an
outstanding issue cannot be repaid when due. 3. Amount of credit: commercial paper offers the firm with very large
credit needs a single source for all its short-term financing. Because of loan amount restrictions placed on the banks by
the regulatory authorities, obtaining the necessary funds from a commercial bank might require borrowing from a
number of institutions; 4. Prestige. Because it is widely recognized that only the most creditworthy borrowers have
access to the commercial paper market, its use signifies a firm's credit status.

Answer to Question 3

E