Question: QUESTION 1 a) Sharon Bakery Sdn. Bhd. would like to obtain short-term financing and due to interest rate has increased several times reaching all-time high,

QUESTION 1

a) Sharon Bakery Sdn. Bhd. would like to obtain short-term financing and due to interest

rate has increased several times reaching all-time high, she has decided to use trade

credit as a source of short-term financing.

(i) Define trade credit and explain why it is the most suitable short-term financing

to be used by Sharon given the above scenario. (5 marks)

(ii) Explain any TWO (2) advantages and TWO (2) disadvantages of trade credit.

(8 marks)

b) Explain any THREE (3) advantages of bonds to bondholders with examples.

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