Which of the Following Observations Is True of a Spot

question 81

Multiple Choice

Which of the following observations is true of a spot loan?

• A)It involves a maximum size and a maximum period of time over which the borrower can withdraw funds.
• B)It involves immediate withdrawal of the entire loan amount by the borrower.
• C)It is an unsecured short-term debt instrument issued by corporations.
• D)It is a nonbank loan substitute.
• E)It is a line of credit.

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Definitions:

LIBOR

The London Interbank Offered Rate, previously a benchmark interest rate at which major global banks lend to one another.

Bankers' Acceptances

Short-term debt instruments issued by a company that is guaranteed by a commercial bank, commonly used in international trade.

Brokers' Calls

The interest rate charged by banks on loans extended to brokerage firms for the purpose of funding clients' margin accounts.

Residual Claimant

An individual or entity entitled to a share of a company's assets only after all debts and other obligations have been met in the event of liquidation.