1. Swingline Staplers sells a $1,000,000 receivable to a factor. The receivable is due in 6 months. The factor charges an upfront fee of 4% for purchasing the receivable on a nonrecourse basis, and a factoring fee of 1% per month for every month that the receivable is outstanding. The 1% per month factoring fee is paid at the time the receivables are sold to the factor. What is the all-in (effective annual) cost of factoring?

A. 23.46%

B. 10.00%

C. 14.61%

D. 19.30%

2. Transaction exposure and operating exposure are both components of

A. interest rate exposure.

B. translation exposure.

C. economic exposure.

D. nonmonetary asset exposure.

Notes from the book: Transaction exposures to currency risk are monetary in nature, and operating exposure is the exposure of real (Nonmonetary assets)