Sophia Principles of Finance Milestone 4 questions with answers

1 Which of the following is an example of an operational risk for a company that manufactures automobiles? Rising interest rates that affect the terms of car loans, thereby decreasing demand Damage to completed cars held on a storage lot A state tax increase that makes buying and registering a car more expensive A national car rental agency backing out of a contract to buy a certain volume of new cars CONCEPT Risk and Capital Budgeting 2 Which of the following is a goal of working capital management? To ensure liquidity and increase cash holding costs To balance adequate cash flow against maximal returns To lengthen the span of time between payment of accounts payable and collection of accounts receivable To minimize free working capital and maximize opportunity costs CONCEPT Working Capital Financing 3 Seed money is a type of financing appropriate for a company in what stage of development? Growth Introduction Maturity Decline CONCEPT Types of Financing 4 Kiran needs additional short-term financing for his robotics company, so he asks his suppliers if they could issue a discount if he pays his bills early. What type of financing resource is Kiran using? Trade credit Barter Peer-to-peer lending Factoring