Dan Bought Three New Trucks with a Loan Obtained from the First

question 93

Multiple Choice

Dan bought three new trucks with a loan obtained from the First National Bank.If he fails to repay the loan,the bank will repossess the trucks.The trucks are

• A) bought with an unsecured loan.
• B) bought with a line of credit.
• C) collateral.
• D) interest.
• E) principal.

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Definitions:

Interest Rate

The percentage of a loan charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage rate.

Note Issuance

The process of creating and distributing a promissory note, which is a financial instrument indicating a promise to pay.

Interest Expense

The financial burden on an entity for using loans or credit over a certain period.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in investment appraisal.