CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

Inventory is in the possession of a third party under which of the following methods?

A. Inventory blanket lien
B. Trust receipt arrangement
C. Warehouse receipt arrangement
D. Inventory factoring
Correct Answer: C

User Contributed Comments 4

User Comment
jpducros Can someone coment the other answers ?
Jurrens A lien would mean that the inventory is basically being used as collateral for a loan, but the third party doesn't actually take possession unless they default on loan (that's why it isn't A)
jonan203 D = selling your receivables to a third party
ascruggs92 A. Using inventory as collateral, but does not specify what inventory
B. Specified Inventory used as collateral
D. Not a thing. You can factor your receivables (sell them to a financial institution for a small discount), you sell inventory.
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