Which of the Following Terms Best Describes a Loan Where

question 35

Multiple Choice

Which of the following terms best describes a loan where a larger line of credit or lower interest rate has been obtained by providing collateral to back that loan?

• A) a term loan
• B) a private placement
• C) an asset-backed line of credit
• D) a revolving line of credit

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Definitions:

Fixed Costs

Fixed overheads that are unaffected by changes in production or sales volume, like rental costs, payroll, and insurance charges.

Strategic Option

Refers to choices available to a company or an investor that could affect key business or investment strategies beneficially.

Soft Rationing

The situation where a company limits the amount of financial resources available for certain projects based on internal policy decisions.

Hard Rationing

A severe form of capital rationing where external factors such as market conditions or regulatory constraints limit the availability of funding.