FIN 310 EXAM 2 QUESTIONS AND ANSWERS SURE A.pdf

FIN 310 EXAM 2 QUESTIONS AND ANSWERS SURE
A+
✔✔Carrying costs - ✔✔Costs of holding current assets

✔✔Shortage costs - ✔✔Costs from insufficient current assets

✔✔Float - ✔✔Difference between bank balance and book balance

✔✔Disbursement float - ✔✔Checks written but not yet cleared

✔✔Collection float - ✔✔Checks deposited but not yet available

✔✔Net float - ✔✔Disbursement float + collection float

✔✔Goal of float management - ✔✔Collect early and pay late

✔✔Transaction motive for cash - ✔✔Holding cash for day-to-day operations

✔✔Precautionary motive for cash - ✔✔Holding cash for emergencies

✔✔Speculative motive for cash - ✔✔Holding cash for unexpected opportunities

✔✔Money market securities - ✔✔Short-term investments with maturity less than or
equal to one year

✔✔Terms of sale - ✔✔Credit terms offered to customers

✔✔2/10 net 45 - ✔✔2% discount if paid within 10 days, otherwise full amount due in 45
days