Answer the following statements true (T) or false (F)
1. The pledging cost of accounts receivable is normally 1 to 4 percent above the prime rate.
2. In pledging accounts receivable, the percentage advanced against the adjusted collateral is determined by the borrower based on its overall evaluation on the quality of the acceptable receivables and the expected cost of the liquidation.
3. Factoring accounts receivable is relatively an inexpensive source of unsecured short-term funds.
4. Factoring accounts receivable is relatively an expensive source of unsecured short-term funds.
5. Factoring accounts receivable is relatively an inexpensive source of unsecured short-term funds that allows firms to turn accounts receivable immediately into cash.
1. TRUE
2. FALSE
3. FALSE
4. FALSE
5. FALSE
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