"Corporate Finance":collateralized loans

C is correct. A “pull” on liquidity occurs when disbursements are made too quickly (e.g., current liabilities are paid instead of being held or when credit availability is reduced or limited). A “drag” on liquidity occurs when receipts lag (i.e., non-cash current assets do not convert to cash quickly). Consequently, a reduction in a credit line is a “pull” on liquidity.

B is incorrect because it is a “drag” on liquidity.

A is incorrect because it is a “drag” on liquidity. It is a result of increased assets.

B is correct. Smaller companies use collateralized loans, factoring, or loans from nonbank companies as their sources of short-term financing. Larger companies can take advantage of commercial paper, banker’s acceptances, uncommitted lines, and revolving credit agreements.

A is incorrect. Smaller companies use collateralized loans, factoring, or loans from non-bank companies as their sources of short-term financing. Larger companies can take advantage of commercial paper, banker’s acceptances, uncommitted lines, and revolving credit agreements.

C is incorrect. Smaller companies use collateralized loans, factoring, or loans from non-bank companies as their sources of short-term financing. Larger companies can take advantage of commercial paper, banker’s acceptances, uncommitted lines, and revolving credit agreements.