CFA Practice Question

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CFA Practice Question

Which of the following are secondary sources of liquidity?

I. Trade credit
II. Negotiating debt contracts
III. Liquidating assets
IV. Short-term investment portfolios
Correct Answer: II and III

User Contributed Comments 4

User Comment
johntan1979 Trade credit is the largest use of capital for a majority of B2B sellers in the US and is a critical source of capital for a majority of all businesses. Good example is Wal-Mart: trade credit for Wal-Mart is 8 times the amount of capital invested by shareholders.
melmay11 Thanks Johntan1979 for the context!
ibrahim18 Secondary sources of liquidity affect daily operations.
jabiller Credit was frozen or taken away by banks during the Financial Crisis of 2008. CFO's everywhere were trying to figure out how to make payroll because we live in a credit world. You may have had a credit card that actually lowered your limit to borrow during this time period.
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