A Single-Payment Loan Used to Finance a Purchase When the Cash

question 41

Multiple Choice

A single-payment loan used to finance a purchase when the cash to be used for repayment is known to be forthcoming in the near future is a form of _____.

• A)collateral security
• B)interim financing
• C)cumulative borrowing
• D)loan rollover
• E)loan extension

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Definitions:

Premium

An amount paid in excess of the nominal or face value of something, often associated with bonds or insurance.

Bond

A financial instrument where an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.

Stockholders' Equity

Stockholders' equity represents the ownership interest of shareholders in the net assets of a company, calculated as the company's total assets minus its total liabilities.

Bonds Payable

A long-term financial liability where the issuer is obligated to pay back the principal along with interest to the bondholders at a future date.