Question

7. Money market securities have which of the following characteristics? I. long maturities II. low default risk III. high degree of liquidity IV. low rates of return a) I and III only b) II and IIl only c II, III, and IV only d) I, II, III, and IV 8. A lockbox system: a) entails the use of a bank which is centrally located to collect payments on a nationwide basis. b) is designed to deposit a customer's check into the firm's bank account prior to recording the receipt of that check to a customer's account. c) is used to reduce the disbursement float of a firm. d) automatically records payments to a customer's account when the customer's check is received at the lockbox location. 9. Erie County Savings & Loan has branch operations in three states. Each branch deals with a local bank. However, all excess funds in these branch bank accounts are transferred on a daily basis to the firm's primary bank located near the firm's home office. This routine of transferring cash to the primary bank on a regular basis is referred to as: a) cash concentration. b) strategic cash disbursement. c) transfer flotation. d) float management. 10. Which of the following will reduce collection time? I. billing customers by mail rather than electronically II. accepting debit cards but not checks as payment for a sale III. offering cash discounts for early payment IV. reducing the processing delay by one day a) I and Il only b) II and III only c) I, II, and IlI only d) II, III, and IV only

Answer 1

7. Answer-D. (II, III, IV only).

8.Answer-D.

9.Answer-A (Cash Concentration)