Question

1. 

Which of the following statements is NOT correct?

 Select one.

 a. A 15-year mortgage will have a larger monthly payment that an otherwise similar 30-year

 mortgage

 b. An annuity due will have a higher present value that a similar ordinary annuity

 c. If an investment earns 10% interest compounded annually, its effective rate will also be 10%

 d. A bond with an annual coupon will have a higher value than a similar bond with a semi-annual coupon

 e. None of the above; they are all true

 2.

 Which of the following statements about factoring accounts receivables is NOT correct?

 Select one

 a It can be a convenient and nearly costless source of financing

 b. It can help a firm accelerate collections of cash

 c. It can become a spontaneous source of financing

 d. It can be a flexible source of financing

Answer 1

	Answer = 1)
	Option a, b & C are Corrects.
	Option D : Bonds with payment of annual coupon and semi annual coupon.
	Semi Annual coupon bonds are paid the interest amount half yearly so you can easilt invest that money and earn the interest
	ín annual bonds we can receive the interest once in a year , So it means the half yearlt interest bonds have more demand
	So it means a bond with semi annual coupon have more value than bonds having coupon value once in a year.
	So, answer = Option D
	Answer = 2)
	Factoring of account receivable means the selling of account receivable of the company.
	Normally Companies take this loan only when they are not getting any loan than they
	can sell there receivables and get some money and remove the AR from there accounts
	It is costlier finance because the purhcasing companies have there cost for collection of
	the AR plus they can factor interest and others cost also for the same.
	So, Option b,c & d are correct
	Option A = Because the Account receivable factoring have the high cost so this option is not correct.
	Answer = Option A