1. A Korean coffee cup manufacturer sell $3,000,000 in accounts receivable to a factor. The receivables are due in 60 days. The factor charges a 1.5% per month factoring fee for purchasing the accounts receivable and the fee is paid at the time the receivables are sold to the factor. What is the all-in (effective annual) cost of financing the A/R through factoring?
A. 17.46% B. 20.05% C. 2.10% D. 28.08%
2. Exposure occurs whenever a company has assets and liabilities denominated in foreign currencies.
a) Transaction
b) Transfer Price
c) Translation
d) Transparent
3. Calculate the systematic and unsystematic variance for each company. Compute the unsystematic risk as a ratio of total variance of each security and interpret the results.