Pick the right short-term funding

Exercise and reference answers

Questions

1. Question

   Unsecured short-term debt issued by a financially strong corporation

   Choices

   1. Commercial paper
   2. Mortgage loan
   3. Preferred stock

   Correct choice

   Commercial paper

2. Question

   Selling accounts receivable outright at a discount

   Choices

   1. Trade credit
   2. Factoring
   3. Underwriting

   Correct choice

   Factoring

3. Question

   Credit the seller gives the buyer until payment falls due

   Choices

   1. Commercial paper
   2. Revolving credit
   3. Trade credit

   Correct choice

   Trade credit

4. Question

   A guaranteed line of credit that carries an extra fee

   Choices

   1. Revolving credit
   2. Term loan
   3. Factoring

   Correct choice

   Revolving credit

5. Question

   A loan that requires specific assets pledged as collateral

   Choices

   1. Secured loan
   2. Unsecured loan

   Correct choice

   Secured loan

Instructions

Tap the funding source each description points to.

Explanation