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Economics
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18 Dec 2019

Which of the following should be (if available) the entrepreneurs most economical choice for short term cash?

A.) inventory backed loan

B.) credit card

C.) Home equity line of credit

d.)sells recievables

E. Recievables back loans

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Related questions

What is the contribution to the asset base of the following items under the Basel III requirements?

Ā  Ā 
a) $10 million cash reserves Ā 
b) $50 million 91-day US Treasury bills Ā 
c) $25 million cash items in the process of collection Ā 
d) $5 million UK Government bonds, OECD CRD rated 1. Ā 
e) $5 million French short term government bonds, OECD CRD rated 2. Ā 
f) $1 million general obligation bonds Ā 
g) $40 million repurchase agreements (against U.S Treasuries) Ā 
h) $2 million loans to a foreign bank, OECD rated 3. Ā 
i) ) $500 million 1-4 family home mortgages, category 1, loan-to-value ratio 80% Ā 
j) $10 million 1-4 family home mortgages, category 2, loan to value ratio 95% Ā 
K) $5 million 1-4 family home mortgages, 100 days past due. Ā 
L) $500 million commercial and industrial loans, AAA-rated. Ā 
M) $500 million commercial and industrial loans, B- rated. Ā 
N) $100,000 performance-related standby letters of credit to a municipality issuing general obligation bonds. Ā 
P) $7 million commercial letters of credit to a foreign bank. OECD CRC rated 2. Ā 
Q) $3 million five-year loan commitment to a foreign government, OECD CRC rated 1. Ā 
R) $8 million bankers' acceptance conveyed to a U.S AA rated corporation. Ā 
S) $17 million three year loan commitment to a private agent. Ā 
t) $17 million three month loan commitment to a private agent. Ā 
U) $30 million standby letter of credit to back an A-rated corporate issue of commercial paper. Ā 
V) $4 million five-year interest rate swap with no current exposure. Ā 
W) $6 million two-year currency swap with $500,000 current exposure. Ā 

Many people display something like hyperbolic discounting. Some businesses thrive on supporting this sort of short-term excess. For example, several establishments offer payday loansĆ¢ĀˆĀ’short-term loans with ultrahigh interest rates designed to be paid off the next time the person is paid.

a) Suppose you were considering opening such a payday loan establishment. Given that hyperbolic discounters often fail to follow through on plans, how could you structure the loans to ensure payment? Use the quasi-hyperbolic model to make your argument. present bias: not gonna have $ to pay back

b) The absolute-magnitude effect suggests that people are much closer to time consistency with regard to larger amounts. How might this explain the difference in the structure of consumer credit (or short-term loans) and banks that make larger loans?

c) Lotteries often offer winners an option of receiving either an annual payment of a relatively small amount that adds up to the full prize over a number of years or a one-time payment at a steep discount. Describe how time inconsistency might affect a lottery winnerĆ¢Ā€Ā™s decision. How might the lottery winner view her decision after the passage of time?

10. Which of the following instruments would most likely be utilized in the direct finance market?

A) Bank commercial loans. B) U.S. Treasury Bills.

C) Commercial Paper. D) Equities.

11. The managers of a firm met with a loan officer from a local bank to apply for a loan. They told the bank's loan

officer that the loan is intended to finance an expansion in the companyĆ¢Ā€Ā™s production facility. Based on this

information, the loan officer granted the loan. However unexpected tariffs increased the cost of raw materials

needed in the production process and the loan had to be used to pay for materials rather than the planned

expansion. This incident is an example of

A) moral hazard.

B) market risk.

C) adverse selection.

D) banks' failing to charge high enough interest rates on business loans.

E) a situation in which direct finance, rather than indirect finance, should be employed.

12. From the choices below, indicate what is likely the most important asset category (in terms of $ value) in a

Money Market Mutual Fund.

A) Corporate Bonds B) Treasury Bills C) Non-Negotiable CDs D) Equities

13. Compared to interest rates on long-term U.S. Treasury debt, interest rates on short-term U.S. Treasury debt tends to

fluctuate________ and is usually __________ over time.

A) more: higher B) less: lower C) more; lower D) less; higher

14. Which of the following is true about legal tender?

A) Only legal tender may be used to pay taxes in the U.S.

B) Having legal tender status from the government is sufficient for something to be used as money.

C) Cash and checking accounts are legal tender.

D) None of the above is accurate.

15. When economists refer to the role of money as a unit of account, they mean that

A) most accounting systems reflect that goods are purchased with currency.

B) all goods are priced in terms of all other goods.

C) money gives traders a single, consistent way of measuring value in the economy.

D) money makes it possible for specialization to take place.

E) agents do not have to exercise their claim on scarce resources immediately.

16. The Federal Reserve System:

A) is required to make loans in the Fed Funds market

B) is required to create the money necessary for the U.S. Government to pay its bills.

C) is required to make loans to the U.S. Treasury.

D) is required to maintain price stability.

17. The interest rate that the Fed targets to indicate its stance on monetary policy is known as:

A) the discount rate. B) the prime rate. C) the fed funds rate. D) the standard rate.

18. Of money's three functions, the one that allows us to make decisions that maximize our satisfaction is its function as a

A) medium of exchange B) unit of account. C) standard of deferred payment D) store of value.

19. In the United States, money is backed by

A) gold and silver. B) Federal Reserve notes.

C) Congress D) Social infrastructure, political stability, and economic potential.

20. Which of the following would not be considered to be part of the money supply?

A) Currency in ATM machines

B) Coins stored in childrenĆ¢Ā€Ā™s piggy banks

C) U.S. Federal Reserve notes being used for transactions in India

D) A & B above

E) None of the above. All are part of the U.S. money supply.

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