Review Set 6 w11 -- MFA

Review Set 6 w11 -- MFA - Review Set 6-Finance 320Fall 2010...

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Review Set 6--Finance 320—Fall 2010 Thought Questions 1. As firms get larger do you think that liquid assets will be a larger or a smaller component of total assets? Why? As firms get larger do you think that cash will be a larger or a smaller component of liquid assets? Why? As revenue and expenditure flows become more variable will liquid assets become a larger or a smaller component of total assets? Why? As revenue and expenditure flows become more variable will cash become a larger or a smaller component of liquid assets? Why? Compared to firms with low growth rates in sales, will firms with high growth have a higher or lower percentage of total assets held in liquid assets? Why? Compared to firms with low growth rates in sales, will firms with high growth have a higher or lower percentage of liquid assets held in cash? Why? 2. What would be the advantage of granting credit to all credit applicants? What would be the pitfalls of such a policy? Other Review Questions 1. Make a list of types of bonds by issuers and identify one important characteristic of each. In addition, describe the type of default protection provided by each type of bond in your list. 2 . Why do large well-established firms issue debentures rather than mortgage bonds? 3 . Define each of the three components of total float time from when the check is placed in the mail until the time good funds are available? 4 . How do lockboxes and controlled disbursement accounts help in cash flow management? Which of these associates with ASAP? With ALAP? 5 . How can bank concentration accounts be connected with investment accounts and lines of credit through sweep accounts? 6
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This note was uploaded on 04/05/2011 for the course FIN 320 taught by Professor Yatin during the Winter '07 term at Grand Valley State.

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Review Set 6 w11 -- MFA - Review Set 6-Finance 320Fall 2010...

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