Commercial Paper – NBC Institute

BMF – Nov 2021 – L1 – SB – Q1 – Management, Individual, and Organizational Behaviour

Question on the definition of group cohesion, factors impacting it, and advantages of convertible bonds for companies and investors.

Question

According to Harold Koontz “management is an art of creating an environment in which people can perform and individuals can co-operate towards attainment of group goals.”

a. Define “group cohesion” and explain briefly FIVE factors that impact group cohesion. (10 Marks)

b. Define Commercial Paper (CP) and state THREE advantages of convertible bonds for companies and THREE advantages of convertible bonds for investors. (10 Marks)

Answer

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Tags: Bonds, Commercial Paper, Convertible Bonds, Group Cohesion, Organizational Behaviour
Level: Level 1

Topic: Management, Individual, and Organizational Behavior
Series: NOV 2021

AFM – Nov 2018 – L3 – Q5b – The role of the treasury function in multinationals

Explain key money market instruments, including securitization, reverse repurchase agreements, banker’s acceptance, and commercial paper.

Question

The money market deals primarily with short-term instruments with short-term maturities and the repayment of funds borrowed is required within a short period of time.

Required:
Explain the following in the money markets:
i) Securitization.
ii) A “Reverse Repurchase Agreement”.
iii) Banker’s Acceptance.
iv) Commercial Paper.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Banker’s Acceptance, Commercial Paper, Money market, Reverse Repurchase Agreement, Securitization
Level: Level 3

Topic: The role of the treasury function in multinationals
Series: NOV 2018

FM – DEC 2023 – L2 – Q5 – Cost of capital | Foreign exchange risk and currency risk management

Calculation of the effective cost of various financing options and explanation of internal strategies to manage foreign currency risk.

Question

a) Markwei Pharmaceuticals Ltd plans to import active ingredients to produce vitamin syrup. The company’s managers are considering three financing options for the cedi equivalent of an invoice value of GH¢2.5 million. The options are detailed below:

Option 1: Use supplier’s credit. The credit term is 1.5/10 net 45.

Option 2: Issue a commercial paper to raise the money from the Ghanaian money market. The commercial paper will pay interest at the rate of 18% per annum. Issue costs totaling GH¢15,000 will be incurred.

Option 3: Obtain a 3-month bank loan. The interest rate on the loan is 22% per annum. Loan arrangement and processing fees are expected to be GH¢5,000.

Required:
i) Compute the effective annual cost of each financing option and recommend the most cost-effective option. (10 marks)
ii) Explain TWO (2) advantages of financing the invoice through the issue of a commercial paper instead of a bank loan. (5 marks)

b) Abongo Shoes Ltd (Abongo) imports leather from Italy. Abongo’s demand for euros to settle its import bills exposes its cash flow to foreign exchange risk. Abongo’s Management is looking for internal strategies they can deploy to hedge the company’s currency risk exposure as external hedging strategies might be too expensive for the company.

Required:
Explain TWO (2) internal strategies for managing foreign currency risk exposures that Abongo’s Management can use. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bank Loan, Commercial Paper, Cost of Finance, Currency risk, Hedging Strategies, Trade Credit
Level: Level 2

Topic: Cost of capital, Foreign exchange risk and currency risk management
Series: DEC 2022

BMF – Nov 2021 – L1 – SB – Q1 – Management, Individual, and Organizational Behaviour

Question on the definition of group cohesion, factors impacting it, and advantages of convertible bonds for companies and investors.

Question

According to Harold Koontz “management is an art of creating an environment in which people can perform and individuals can co-operate towards attainment of group goals.”

a. Define “group cohesion” and explain briefly FIVE factors that impact group cohesion. (10 Marks)

b. Define Commercial Paper (CP) and state THREE advantages of convertible bonds for companies and THREE advantages of convertible bonds for investors. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bonds, Commercial Paper, Convertible Bonds, Group Cohesion, Organizational Behaviour
Level: Level 1

Topic: Management, Individual, and Organizational Behavior
Series: NOV 2021

AFM – Nov 2018 – L3 – Q5b – The role of the treasury function in multinationals

Explain key money market instruments, including securitization, reverse repurchase agreements, banker’s acceptance, and commercial paper.

Question

The money market deals primarily with short-term instruments with short-term maturities and the repayment of funds borrowed is required within a short period of time.

Required:
Explain the following in the money markets:
i) Securitization.
ii) A “Reverse Repurchase Agreement”.
iii) Banker’s Acceptance.
iv) Commercial Paper.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Banker’s Acceptance, Commercial Paper, Money market, Reverse Repurchase Agreement, Securitization
Level: Level 3

Topic: The role of the treasury function in multinationals
Series: NOV 2018

FM – DEC 2023 – L2 – Q5 – Cost of capital | Foreign exchange risk and currency risk management

Calculation of the effective cost of various financing options and explanation of internal strategies to manage foreign currency risk.

Question

Option 1: Use supplier’s credit. The credit term is 1.5/10 net 45.

Option 3: Obtain a 3-month bank loan. The interest rate on the loan is 22% per annum. Loan arrangement and processing fees are expected to be GH¢5,000.

Required:
Explain TWO (2) internal strategies for managing foreign currency risk exposures that Abongo’s Management can use. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bank Loan, Commercial Paper, Cost of Finance, Currency risk, Hedging Strategies, Trade Credit
Level: Level 2

Topic: Cost of capital, Foreign exchange risk and currency risk management
Series: DEC 2022

Question Tag: Commercial Paper

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BMF – Nov 2021 – L1 – SB – Q1 – Management, Individual, and Organizational Behaviour

Question on the definition of group cohesion, factors impacting it, and advantages of convertible bonds for companies and investors.

AFM – Nov 2018 – L3 – Q5b – The role of the treasury function in multinationals

Explain key money market instruments, including securitization, reverse repurchase agreements, banker’s acceptance, and commercial paper.

FM – DEC 2023 – L2 – Q5 – Cost of capital | Foreign exchange risk and currency risk management

Calculation of the effective cost of various financing options and explanation of internal strategies to manage foreign currency risk.

BMF – Nov 2021 – L1 – SB – Q1 – Management, Individual, and Organizational Behaviour

Question on the definition of group cohesion, factors impacting it, and advantages of convertible bonds for companies and investors.

AFM – Nov 2018 – L3 – Q5b – The role of the treasury function in multinationals

Explain key money market instruments, including securitization, reverse repurchase agreements, banker’s acceptance, and commercial paper.

FM – DEC 2023 – L2 – Q5 – Cost of capital | Foreign exchange risk and currency risk management

Calculation of the effective cost of various financing options and explanation of internal strategies to manage foreign currency risk.

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BMF – Nov 2021 – L1 – SB – Q1 – Management, Individual, and Organizational Behaviour

Question on the definition of group cohesion, factors impacting it, and advantages of convertible bonds for companies and investors.

You're reporting an error for "BMF – Nov 2021 – L1 – SB – Q1 – Management, Individual, and Organizational Behaviour"

AFM – Nov 2018 – L3 – Q5b – The role of the treasury function in multinationals

Explain key money market instruments, including securitization, reverse repurchase agreements, banker’s acceptance, and commercial paper.

You're reporting an error for "AFM – Nov 2018 – L3 – Q5b – The role of the treasury function in multinationals"

FM – DEC 2023 – L2 – Q5 – Cost of capital | Foreign exchange risk and currency risk management

Calculation of the effective cost of various financing options and explanation of internal strategies to manage foreign currency risk.

You're reporting an error for "FM – DEC 2023 – L2 – Q5 – Cost of capital | Foreign exchange risk and currency risk management"

BMF – Nov 2021 – L1 – SB – Q1 – Management, Individual, and Organizational Behaviour

Question on the definition of group cohesion, factors impacting it, and advantages of convertible bonds for companies and investors.

You're reporting an error for "BMF – Nov 2021 – L1 – SB – Q1 – Management, Individual, and Organizational Behaviour"

AFM – Nov 2018 – L3 – Q5b – The role of the treasury function in multinationals

Explain key money market instruments, including securitization, reverse repurchase agreements, banker’s acceptance, and commercial paper.

You're reporting an error for "AFM – Nov 2018 – L3 – Q5b – The role of the treasury function in multinationals"

FM – DEC 2023 – L2 – Q5 – Cost of capital | Foreign exchange risk and currency risk management

Calculation of the effective cost of various financing options and explanation of internal strategies to manage foreign currency risk.

You're reporting an error for "FM – DEC 2023 – L2 – Q5 – Cost of capital | Foreign exchange risk and currency risk management"

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