Why would any seller offer trade financing, since it ties up working capital without generating any income through interest payments?

Q: What is capital rationing?

A:

Q: In what way does leverage increase the riskiness of a loan?

A: The advantage a financial specialist or investor gets from utilizing debt is called financial…

Q: How do corporate borrowers use interest rate or cross-currency swaps to reduce reduce the costs of…

A: Optimum Capital Structure Occasionally, some financial restructuring is required by a company to…

Q: Must two assets with the same fundamental characteristics (e.g. same payment stream, same credit…

A: Assets are valued on the basis of profit,cash flow and associated risk.But there value may not be…

Q: What are the disadvantages of cutting expenses/costs and utilising trade credit insurance, when it…

A: Answer: Trade Credit Insurance is the methods that is applied by the company to protect its debts…

Q: Why are the costs of selling equity so much larger than the costs of selling debt?

A: The Debt and Equity are part of capital structure of a company. Cost of equity is the minimum…

Q: why would a business lean towards a rights issue rather than pay for long-term loans?

A: When a company is selling shares to its employees, existing shareholders and parties related to the…

Q: Does Arbitrage destabilize foreign exchange markets? Support your logic about that statement

A: Solution- F = S*1+if/1+id  F= Forward Exchange Rate  S= Current Spot Exchange Rate  Id= Interest…

Q: capital controls, which investment would you choose? What are the risks associated with this trade?

A: The United States has always been ranked among the best in the world for its competitiveness and…

Q: Why would a company choose to factor itsreceivables, given that it will get less money than…

A: Sales means delivery of goods and services by the seller. It can be for cash sales or sales made on…

Q: What is securitization? What are its advantages to borrowers?What are its advantages to lenders?

A: Securitization is a financial process that takes an asset of some kind and turns it into a security,…

Q: What justifies an exporter financing an importer? Is Explain.

A: There are imports and there are exports both are necessary parts of international trade and finance…

Q: How does the cost of costly trade credit generally compare withthe cost of short-term bank loans?

A: Costly trade credit imply companies that make payments after the discount period as they forego the…

Q: In the extractive industries, businesses may pay dividendsin excess of net income. What is the…

A: Dividends: This is the amount of cash distributed to stockholders by a company out its earnings,…

Q: What is meant by reserve borrowing capacity, and why is itimportant to firms?

A: Introduction: Capital structure relates to financing of the overall activities and development of a…

Q: True or False: When a company borrows money to finance the purchase of an asset to use in its…

A: Every organization's wants to achieve that much earing so that they can save amount after paying its…

Q: Why might a company hold low-yielding marketable securitieswhen it could earn a much higher return…

A: Introduction: Marketable security is a general word encompassing transactions that a company can…

Q: How may the domestic cost of capital for a foreign venture be adjusted to account for currency rate…

A: Country risk refers to a country's economic, political, and corporate hazards, all of which may…

Q: why a firm should consider hedging net payables and recivables with currency options rather than…

A: Hedging is the process by which risk can be reduced. Options are the derivative instruments that…

Q: Why would you expect securitization to take place only in highly developed capital markets?

A: Firstly, we understand what is securitization, In simple word it is a process of liquidation of…

Q: What’s the difference between free trade credit and costly tradecredit?

A: Trade Credit is a kind of credit financing extended by the trader or supplier of goods and services…

Q: How does the cost of costly trade credit generally compare with the cost of shorttermbank loans?

A: Trade credit is that the quantity businesses owe to their suppliers on inventory, products, and…

Q: What are the differences between mutually exclusive, non-mutually exclusive,and capital rationing…

A: DIFFERENCE BETWEEN  MUTUALLY EXCLUSIVE ,  NON MUTUALLY  EXCLUSIVE ,AND CAPITAL RATIONING DECISION…

Q: How can brokers and dealers make money? Which activity is riskier? Why?

A: Brokers make money generally by charging the commission on the transaction as the % of the…

Q: What are the strategies of deferring capital gains, an exchange may be used in conjunction with…

A: The 1031 Exchange permits Associate in Nursing capitalist to sell assets or property and…

Q: Why might the cost of a mortgage loan be greater than the cost of using unsecured corporate debt to…

A: A mortgage shall be a credit the borrower utilizes to buy or retain a house and accepts to repay…