Delaware Aluminum Uses Its Stock of Unsold Aluminum Products as Collateral

question 312

Multiple Choice

Delaware Aluminum uses its stock of unsold aluminum products as collateral for a short-term loan.This arrangement represents:

• A)a secured loan.
• B)a revolving credit agreement.
• C)factoring.
• D)an unsecured loan.

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Definitions:

Monthly Compounded

Calculation of interest on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan, compounded every month.

RRSP

Registered Retirement Savings Plan, a Canadian account for holding savings and investment assets, with tax benefits.

Canadian Equity

Investments in stocks or shares of Canadian companies, representing ownership and a claim on part of the company's assets and earnings.

Annually Compounded

An interest rate compound method where the calculation of interest is done once per year.