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95. Betty Boop has saved enough money to go back to grad school. She is planning to put the
money in a money market account where it will earn 2.5 percent. If she anticipates slowly
drawing the money out over the course of her time in grad school at a constant rate of $29,000
per year, but is charged a commission of $7.95 every time she sells shares, how much should she
take out of the mutual fund at a time?
96. What effect does increasing the standard deviation in daily cash flows have on the cash
return point in the Miller-Orr model?
97. What effect does decreasing the standard deviation in daily cash flows have on the cash
return point in the Miller-Orr model?
98. Which of the following actions will cause a firm's net working capital to increase?
99. Which of the following actions will cause a firm's net working capital to decrease?
100. Imagine a firm has a temporary surplus of cash meant to fund an expansion project in the
next nine months. Which of the following statements is correct?
101. Why do firms offer customers discounts for paying early?
102. What is the difference between a lockbox system and concentration banking?
103. All of the following are different techniques that can be used to help firms reduce
collection float EXCEPT:
104. All of the following are the different types of float the firm may experience in its
collections EXCEPT:
105. If a firm starts selling its accounts receivable to a factor, how will the firm's cash cycle
change?
106. If demand for a firm's products suddenly slows down so that inventory increases while
sales decrease, how will the firm's needs for net working capital react?
107. If demand for a firm's products suddenly increases so that inventory decreases while
sales increase, how will the firm's needs for net working capital react?
108. Which of the following is the best description of the operating cycle?
109. When the firm finances the seasonally adjusted average level of asset demand with long-
term debt and equity, the firm is said to follow a:
110. Why would a firm ever use short-term debt to finance permanent current assets?
111. Everything else held constant, will an increase in the amount of inventory on hand
increase or decrease the firm's profitability?
112. If a firm's inventory ratio increases, what will happen to the firm's cash cycle?
113. All of the following will result in an increase in net working capital EXCEPT:
114. If a firm's inventory ratio increases, what will happen to the firm's operating cycle?
115. A firm wants to reduce its cash conversion cycle. Which of the following actions will
reduce its cash conversion cycle?
116. If the firm wants to identify the percentage of accounts receivable that are over 90 days
old, the firm should prepare:
117. The financing policy that will result in investing in marketable securities when asset
requirements are low is referred to as:
118. The optimal cash replenishment level will increase with all of the following changes
EXCEPT:
