An Asset That Can Be Converted Quickly into Cash at a Low

question 97

Multiple Choice

An asset that can be converted quickly into cash at a low transaction cost is known as

• A)a liquid asset.
• B)deposits.
• C)credit card
• D)None of the above is correct.

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Definitions:

Compensating Balance

A minimum bank account balance that a borrower agrees to maintain with a lender as part of the terms of a loan.

Rate of Interest

The percentage of a sum of money charged for its use, typically expressed as an annual percentage.

Equity Financing

The method of raising capital through the sale of shares in a company, thereby granting shareholders ownership interests.

Five C's of Credit

are criteria that lenders use to evaluate the creditworthiness of a borrower: character, capacity, capital, collateral, and conditions.