Jill is the CFO of Summertime Adventures which is a seasonal firm specializing in
products related to water sports. The firm purchases inventory one month before it is
sold and pays for its purchases 60 days after the invoice date. Sales are highest during
July and August. Currently, Jill is preparing the cash disbursements section of the firm's
cash budget. Which one of the following statements is supported by this information?
A. Inventory purchases will be highest during the months of July and August.
B. Inventory purchases will be highest during the months of May and June.
C. Payments to suppliers will be highest during the months of June and July.
D. Payments to suppliers will be highest during the months of July and August.
E. Payments to suppliers will be highest during the months of August and September.
Which one of the following will provide you with the same value that you would have
if you just purchased BAT stock?
A. sell a put option on BAT stock and invest at the risk-free rate of return
B. buy both a call option and a put option on BAT stock and also lend out funds at the
risk-free rate
C. sell a put and buy a call on BAT stock as well as invest at the risk-free rate of return
D. lend out funds at the risk-free rate of return and sell a put option on BAT stock
E. borrow funds at the risk-free rate of return and invest the proceeds in equivalent
amounts of put and call options on BAT stock
How is the principal amount of an interest-only loan repaid?
A. The principal is forgiven over the loan period so does not have to be repaid.
B. The principal is repaid in equal increments and included in each loan payment.
C. The principal is repaid in a lump sum at the end of the loan period.
D. The principal is repaid in equal annual payments.
E. The principal is repaid in increasing increments through regular monthly payments.
Which one of the following statements concerning stock exchanges is correct?