A ________ Is an Agreement with a Bank That Allows

question 148

Multiple Choice

A ________ is an agreement with a bank that allows a small business to borrow up to a predetermined specified amount during the year without making an application each time.

• A)term loan
• B)factor
• C)line of credit
• D)floor plan

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Definitions:

Monthly Compounding

The process where interest is added to the principal sum of a loan or deposit once every month.

Nominal Rate

This is an interest rate that has not been adjusted for inflation, representing the face value of financial products.

Effective Rate

The actual interest rate on an investment or loan, taking into account the compounding of interest at specified intervals over time.

Compounded Continuously

A method of calculating interest where the amount earned is constantly reinvested, leading to exponential growth over time.