Flashcards in Financial Decisions Deck (10)
What are the strategies of short-term financing?
Anticipate higher levels of temporary working capital that require greater agility & flexibility
What are the advantages of short-term financing?
Increased liquidity, Profitability, and decreased financing cost
What are the disadvantages of short-term financing?
Increased interest rate risk & credit risk
What are the advantages of long-term financing?
Decreased interest rate risk & credit risk
What are the disadvantages of long-term financing?
Decreased profitability, liquidity, and increased financing costs
What is required by vendors from the bank before they extend credit?
Letter of Credit
What protects value of debt by protecting credit rating on debtor?
Computation of expected value
Multiple the probability of the outcome by its value or profit
What type of bond maintains a constant market value?