Question: 1. Under what circumstances would it be advisable to borrow money to take a cash discount? 2. Discuss the relative use of credit between large

1. Under what circumstances would it be advisable to borrow money to take a cash discount?

2. Discuss the relative use of credit between large and small firms. Which group is generally in the net creditor position, and why?

3. How have new banking laws influenced competition?

4. What is the prime interest rate? How does the average bank customer fare in regard to the prime interest rate?

5. What does LIBOR mean? Is LIBOR normally higher or lower than the U.S. prime interest rate?

6. Why might a firm keep a safety stock? What effect is it likely to have on carrying cost of inventory?

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