Factoring in Business Finance
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Questions and Answers

What is the responsibility of the factor in a factoring arrangement?

  • Sales ledger administration (correct)
  • Marketing strategies development
  • Human resources functions
  • Inventory management
  • Which legislation regulates factoring business in India?

  • Factoring Regulation Act, 2011 (correct)
  • Factoring Control Act, 2010
  • Cash against Invoices Act, 2009
  • Invoice Financing Law, 2012
  • How does factoring benefit businesses?

  • Enhances efficiency in managing receivables (correct)
  • Delays cash flow
  • Increases tax liabilities
  • Reduces credit control
  • In full-service factoring, who bears the losses if the buyer fails to pay?

    <p>The factor</p> Signup and view all the answers

    What does factoring involve?

    <p>Sale of receivables</p> Signup and view all the answers

    What is the primary function of financial markets?

    <p>Determine the price of commodities</p> Signup and view all the answers

    What do financial markets rely on to determine prices?

    <p>Demand and supply forces</p> Signup and view all the answers

    Which institutions are major purveyors of credit in India?

    <p>Commercial banks and non-banking financial companies</p> Signup and view all the answers

    What characterizes the term structure of the credit market?

    <p>The duration of credit - short-term, medium-term, long-term</p> Signup and view all the answers

    In financial markets, how are prices typically determined?

    <p>Through a process known as price discovery</p> Signup and view all the answers

    What role do non-institutional sources of credit play in the credit market?

    <p>Provide credit alongside institutional sources</p> Signup and view all the answers

    Why do financial markets operate with low transaction costs?

    <p>To attract more participants to trade</p> Signup and view all the answers

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