Question 1

The Hobby Shop has a checking account with a ledger balance of $692.The firm has $1,063 in uncollected deposits and $930 in outstanding checks.What is the amount of the disbursement float on this account?

Accepted Answer

A)  $0
B)  $217
C)  $930
D)  $990
E)  $1,063F) A) and E)
G) A) and C)

Question 2

Your firm generally receives 4 checks a month.The check amounts and the collection delay for each check is shown below.Given this information what is the amount of the average daily float? Assume a 30 day month.

Accepted Answer

A)  $1,120
B)  $2,333
C)  $2,640
D)  $2,900
E)  $3,416F) D) and E)
G) A) and B)

Question 3

GT Motors regularly issues short-term debt to finance its daily operations.Suddenly, the credit markets froze and no funds were available for borrowing.Fortunately, the firm had some cash reserves saved that it was able to use to fund its operations until additional credit was available.The need to retain cash for situations such as this is referred to as which one of the following motives for holding cash?

Accepted Answer

A)  speculative
B)  float
C)  compensating
D)  precautionary
E)  transactionF) C) and E)
G) A) and D)

Question 4

A lockbox system:

Accepted Answer

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)  is efficient regardless of the locations selected for lockbox destinations.
E)  automatically records payments to a customer's account when the customer's check is received at the lockbox location.F) C) and D)
G) B) and E)

Question 5

Which one of the following statements is correct?

Accepted Answer

A)  Funds received via automated clearinghouse transfers are available that day.
B)  A depository transfer check is the most costly means of transferring funds into a cash concentration account.
C)  The means selected to transfer funds into a concentration account depends primarily upon the size of the transfers.
D)  Concentration accounts are used to transfer funds to lockbox locations as needed.
E)  The most expedient means of transferring funds into a concentration account is a wire transfer.F) A) and B)
G) A) and C)

Question 6

Cash management primarily involves:

Accepted Answer

A)  optimizing a firm's collections and disbursements of cash.
B)  maximizing the income a firm earns on its cash reserves.
C)  reconciling a firm's book balance with its bank balance.
D)  determining the optimal level of liquidity a firm should maintain.
E)  determining the best method of raising capital.F) A) and B)
G) A) and E)

Question 7

Your firm has an average receipt size of $60.A bank has approached you concerning a lockbox service that will decrease your total collection time by 1 day.You typically receive 25,000 checks per day.The daily interest rate is 0.016 percent.What is the NPV of the lockbox project if the bank charges a fee of $210 per day?

Accepted Answer

A)  $187,500
B)  $367,500
C)  $903,350
D)  $1,412,500
E)  $1,680,000F) B) and C)
G) All of the above

Question 8

Which of the following should help reduce the total collection time for a firm?
I.opening a post office box so mail can be received earlier in the morning
II.assigning additional staff in the morning to process incoming payments
III.providing a discount for customers who pay electronically
IV.establishing preauthorized payments from customers

Accepted Answer

A)  I and II only
B)  III and IV only
C)  II, III, and IV only
D)  I, II, and IV only
E)  I, II, III, and IVF) B) and D)
G) A) and D)

Question 9

You are considering implementing a lockbox system for your firm.The system is expected to reduce the average collection time by 2.8 days.On an average day, your firm receives 2,419 checks with an average value of $1,287 each.The daily interest rate on Treasury bills is 0.016 percent.The bank charge per check is $0.30.What is the net present value of this lockbox arrangement?

Accepted Answer

A)  -$4,535,625
B)  -$2,611,575
C)  $187,419
D)  $4,181,483
E)  $13,252,733F) A) and B)
G) C) and D)

Question 10

Which of the following statements is correct?

Accepted Answer

A)  A firm has a greater likelihood of needing an unexpected loan when its cash flows are relatively constant over time.
B)  The cost of borrowing affects the target cash balance of a firm.
C)  Management's desire to maintain a low cash balance has no effect on the borrowing needs of a firm.
D)  The target cash balance increases as the interest rate rises.
E)  The target cash balance decreases as the order costs increase.F) A) and E)
G) B) and C)

Question 11

Explain how the unethical use of uncollected funds has been impacted by the growth of on-line retailing and banking.

Accepted Answer

Whenever cash is moved electro...

Question 12

You are considering implementing a lockbox system for your firm.The system is expected to reduce the average collection time by 1.3 days.On an average day, your firm receives 136 checks with an average value of $219 each.The daily interest rate on Treasury bills is 0.021 percent.The bank charge per check is $0.26.What is the anticipated daily cost of the lockbox system?

Accepted Answer

A)  $3.48
B)  $6.25
C)  $12.60
D)  $35.36
E)  $36.17F) D) and E)
G) C) and D)

Question 13

Explain what a zero-balance account is, how it is used, and how it affects cash management.

Accepted Answer

A zero-balance account is a checking acc...

Question 14

Your neighbor goes to the post office once a month and picks up two checks, one for $18,000 and one for $4,000.The larger check takes 4 days to clear after it is deposited; the smaller one takes 6 days.Assume 30 days per month.What is the weighted average delay?

Accepted Answer

A)  4.21 days
B)  4.36 days
C)  4.78 days
D)  5.00 days
E)  6.00 daysF) B) and D)
G) D) and E)

Question 15

Explain how the Check Clearing Act for the 21st Century affects both collection and disbursement float.

Accepted Answer

Check 21 eliminated the need to present ...

Question 16

The Metallurgical Specialty Co.deals strictly with four customers.The average amount each customer pays per month along with the collection delay associated with each payment is shown below.Given this information, what is the weighted average delay? Assume each month has 30 days.

Accepted Answer

A)  1.98 days
B)  2.04 days
C)  2.09 days
D)  2.16 days
E)  2.23 daysF) B) and C)
G) A) and C)

Question 17

The cash found in a cash drawer that a check-out clerk uses to make change is an example of which of the following motives for holding cash?

Accepted Answer

A)  speculative
B)  daily float
C)  compensating balance
D)  precautionary
E)  transactionF) C) and D)
G) A) and E)

Question 18

The BAT model is used to:

Accepted Answer

A)  maximize the benefits of leverage.
B)  determine the optimal cash position of a firm.
C)  eliminate all daily cash surpluses.
D)  analyze the cash balance given fluctuating cash inflows and outflows.
E)  maximize the opportunity costs of holding cash.F) A) and B)
G) B) and D)

Question 19

You are considering implementing a lockbox system for your firm.The system is expected to reduce the average collection time by 1.2 days.On an average day, your firm receives 320 checks with an average value of $99 each.The daily interest rate on Treasury bills is 0.014 percent.What is the anticipated amount of the daily savings if this system is implemented?

Accepted Answer

A)  $2.61
B)  $3.29
C)  $4.45
D)  $5.32
E)  $5.78F) B) and E)
G) None of the above

Question 20

The Food Wholesaler generally receives 4 checks a month.The check amounts and the collection delay for each check are shown below.Given this information, what is the amount of the average daily float? Assume every month has 30 days.

Accepted Answer

A)  $3,963.89
B)  $21,750.00
C)  $22,236.67
D)  $28,133.33
E)  $35,675.00F) D) and E)
G) B) and C)

Exam 19: Behavioural Finance

Correct Answer
verified

Your neighbor goes to the post office once a month and picks up two checks, one for $18,000 and one for $4,000.The larger check takes 4 days to clear after it is deposited; the smaller one takes 6 days.Assume 30 days per month.What is the weighted average delay?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The cash found in a cash drawer that a check-out clerk uses to make change is an example of which of the following motives for holding cash?

Correct Answer
verified

The BAT model is used to:

Correct Answer
verified

Correct Answer
verified

Which one of the following statements is correct?

Correct Answer
verified

The Food Wholesaler generally receives 4 checks a month.The check amounts and the collection delay for each check are shown below.Given this information, what is the amount of the average daily float? Assume every month has 30 days.

Correct Answer
verified

Correct Answer
verified

The Metallurgical Specialty Co.deals strictly with four customers.The average amount each customer pays per month along with the collection delay associated with each payment is shown below.Given this information, what is the weighted average delay? Assume each month has 30 days.

Correct Answer
verified

Explain how the unethical use of uncollected funds has been impacted by the growth of on-line retailing and banking.

Correct Answer
verified
Whenever cash is moved electro...
View Answer

Correct Answer
verified

Explain how the Check Clearing Act for the 21^st Century affects both collection and disbursement float.

Correct Answer
verified
Check 21 eliminated the need to present ...
View Answer

A lockbox system:

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Explain what a zero-balance account is, how it is used, and how it affects cash management.

Correct Answer
verified
A zero-balance account is a checking acc...
View Answer

Cash management primarily involves:

Correct Answer
verified

The Hobby Shop has a checking account with a ledger balance of $692.The firm has $1,063 in uncollected deposits and $930 in outstanding checks.What is the amount of the disbursement float on this account?

Correct Answer
verified

Your firm generally receives 4 checks a month.The check amounts and the collection delay for each check is shown below.Given this information what is the amount of the average daily float? Assume a 30 day month.

Correct Answer
verified

Exam 19: Behavioural Finance

Correct AnswerverifiedShow Answer

Your neighbor goes to the post office once a month and picks up two checks, one for $18,000 and one for $4,000.The larger check takes 4 days to clear after it is deposited; the smaller one takes 6 days.Assume 30 days per month.What is the weighted average delay?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The cash found in a cash drawer that a check-out clerk uses to make change is an example of which of the following motives for holding cash?

Correct AnswerverifiedShow Answer

The BAT model is used to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

The Food Wholesaler generally receives 4 checks a month.The check amounts and the collection delay for each check are shown below.Given this information, what is the amount of the average daily float? Assume every month has 30 days.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Metallurgical Specialty Co.deals strictly with four customers.The average amount each customer pays per month along with the collection delay associated with each payment is shown below.Given this information, what is the weighted average delay? Assume each month has 30 days.

Correct AnswerverifiedShow Answer

Explain how the unethical use of uncollected funds has been impacted by the growth of on-line retailing and banking.

Correct AnswerverifiedWhenever cash is moved electro...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Explain how the Check Clearing Act for the 21st Century affects both collection and disbursement float.

Correct AnswerverifiedCheck 21 eliminated the need to present ...View AnswerShow Answer

A lockbox system:

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Explain what a zero-balance account is, how it is used, and how it affects cash management.

Correct AnswerverifiedA zero-balance account is a checking acc...View AnswerShow Answer

Cash management primarily involves:

Correct AnswerverifiedShow Answer

The Hobby Shop has a checking account with a ledger balance of $692.The firm has $1,063 in uncollected deposits and $930 in outstanding checks.What is the amount of the disbursement float on this account?

Correct AnswerverifiedShow Answer

Your firm generally receives 4 checks a month.The check amounts and the collection delay for each check is shown below.Given this information what is the amount of the average daily float? Assume a 30 day month.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Whenever cash is moved electro...
View Answer

Correct Answer
verified

Explain how the Check Clearing Act for the 21^st Century affects both collection and disbursement float.

Correct Answer
verified
Check 21 eliminated the need to present ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A zero-balance account is a checking acc...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified