The Required Compensating Balance Is Usually Computed as A

Which of the following is not a true statement about commercial paper? A) Finance paper is sold directly to the lender by the finance company. B) Finance paper is also referred to as direct paper. C) Dealer paper is sold directly to the lender by a finance company. D) Industrial companies, utility firms, or finance companies too small to sell direct paper will sell dealer paper.

Which of the following best describes the benefits to the borrower of selling asset backed securities? A) Due to the portfolio effect, the borrower can package up low quality accounts receivable and sell them for a premium price. B) The borrower trades current cash flows for future cash flows. C) The asset-backed security may carry a better credit rating. D) The borrower has collateral tied to the asset backed security.