TFC (Totally Fake Company) asks their bank what the interest rate would be on a $3 million dollar line of credit (basically, a demand loan). The bank says 6.375%. Then TFC asks what the interest rate would be on a $150 million dollar line of credit, and the bank says 8.375%. Which of the following is the most likely explanation for the higher interest rate? O a. Higher inflation. O b. Higher administrative cost. O c. Lower opportunity cost. d. Lower default risk. Oe. Higher credit risk. Certainty OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 ( Quite sure: >80%)

TFC (Totally Fake Company) asks their bank what the interest rate would be on a $3 million dollar line of credit (basically, a demand loan). The bank says 6.375%. Then TFC asks what the interest rate would be on a $150 million dollar line of credit, and the bank says 8.375%. Which of the following is the most likely explanation for the higher interest rate? O a. Higher inflation. O b. Higher administrative cost. O c. Lower opportunity cost. d. Lower default risk. Oe. Higher credit risk. Certainty OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 ( Quite sure: >80%)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 15P

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