Farmers Savings and Loan Agreed to Extend Eckert's Orchards $200,000

question 150

Multiple Choice

Farmers Savings and Loan agreed to extend Eckert's Orchards $200,000 of unsecured short-term funds, contingent upon the bank having the funds available. This arrangement represents a:

• A) line of credit.
• B) pledge agreement.
• C) factoring agreement.
• D) trade voucher.

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Definitions:

Long-Short Hedge Fund

An investment fund strategy that aims to generate returns by taking long positions in undervalued securities and short positions in overvalued securities.

Short Selling

The practice of selling securities or other financial instruments that are not currently owned, and subsequently repurchasing them at a lower price.

Market Neutral

An investment strategy that seeks to avoid some forms of market risk by taking offsetting positions in different securities, aiming for a net market exposure of zero.

Government Regulation

The act of controlling business behavior through a set of rules or laws set forth by the government to achieve outcomes that might not be achieved through free markets.