6:28Discussion TopicConsumers are often faced with making large purchases to satisfy life's basic needs. Ifyour refrigerator breaks and you don't have much disposable income, you might turn tocredit. Describe who benefits from a credit agreement and how. Why are businesses andinstitutions willing to offer you credit? Explain.Suppose a creditor offers you an agreement where the interest accrues as follows:I= Prt, where I is interest owed ($), P is the amount borrowed, r is the yearly interest rate(96), and t is time (years). What is the mathematical relationship between 1 and r?Between I and t? If you're the borrower, why are these relationships important to you?

Products are purchased on the credit because buying on credit is very easy and convenient because…

Discussion Topic Consumers are often faced with making large purchases to satisfy life's basic needs. If your refrigerator breaks and you don't have much disposable income, you might turn to credit. Describe who benefits from a credit agreement and how. Why are businesses and institutions willing to offer you credit? Explain.

Discussion Topic Consumers are often faced with making large purchases to satisfy life's basic needs. If your refrigerator breaks and you don't have much disposable income, you might turn to credit. Describe who benefits from a credit agreement and how. Why are businesses and institutions willing to offer you credit? Explain.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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28 [Question text] If a company’s average collection period is higher than the industry average, then the company may be: Select one: A. enforcing credit conditions upon its customers which are too stringent. B. too strict in granting credit facility. C. allowing its customers too much time to pay their bills. D. too strict in collecting its accounts receivable.
40 ‘BNM acts as lender of a last resort’. This statement implies that Select one: BNM may provide loan to a person who fails to get it from commercial banks should commercial banks have financial problem, they can make loan from BNM banks have to give loan to BNM whenever needed. if anyone wants to build a resort, BNM may help him financially
25 What lesson did we derive from Suratul Baqara Q2:280 in relation to Islamic banks’ debtor-customer relations?* A. If the debtor is in difficulty, grant him time till it is easy for him to repay B. Be lenient to customers at the time of financing the project C. Default charges apply to any delay of payment D. Cancel the transactions
12 When a company routinely sells on credit, it is inevitable that some of its customers will not pay the amount owed. Group starts True or False
7. What does an increasing collection period for trade receivable suggest about a firm’s credit policy? A. The business is making profits. B. The credit policy is too restrictive. C. The credit policy may be too lenient. D. The business is probably losing qualified customers. E. The collection period has no relationship to a business’s credit policy.
2.-When deciding to accept a cash discount from a supplier, on what day is it advisable to take the financing? A) On the last day of the discount period, to see if they are able to meet the discount. B) On the first day of the discount period, so why wait? C) On any day of the discount period D) In the middle of the discount period, so there is no risk.
Q5. Corporates needs business loans for their day to day operations, suppose you are workingin credit department in Private Sector Bank and a customer approach you for taking termloan, the basic characteristics of term loans are that term loan commitments are of long term.as a banker how would you decide whether to provide him a term loan or not? Along withthis also explain the documents required for term loan by customer?
11 When credit card sales occur, the seller may receive cash immediately, or within a few days, depending upon the specific credit card program being used. Group starts True or False
9. A Co-operative bank QLB grants loans under the following conditions. - (a) If customer has an account witbank and has no loan outstandingwill be granted.(b) If customer has an account with thebank but some amount is outstandingfrom previous loan, then loan will begranted if special arrangementapproval is obtained.(c) Reject loan applications in all other cases. Draw Decision Tree and Table for the bank. 10. Suppose you are the manager of aclothing store with 10 salespersons.Devise the steps that will pay salesbonus of 5% of total sales to salespersonswho sell (5 million worth of clothes.Represent the algorithm in flowchart.
20 - What is the most risky payment method for the importer company?A) Advance payment B) On-off payment C) Payment against documents D) AllE) Payment with acceptance credit
36. Normally commercial banks give short-term loans to business firms which is known as __________. a. Credit card loan b. None of the options c. Personal credit d. Bank credit
Question 5.A bank has borrowing needs at timeT >0. Show that by combining an FRAtrade today with a libor loan at timeT, the bank can today lock in its interest cost forthe periodTtoT+α. Does the borrowing bank need to buy or sell the FRA to do this?What is the fixed rate that the bank locks in?

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