A Business That Needs Short-Term Credit in Excess of Its

question 111

Multiple Choice

A business that needs short-term credit in excess of its regular line of bank credit may:

• A) sell common stock to the bank with a repurchase agreement
• B) subordinate the interests of the owners to the bank's additional loans
• C) make limited use of overdrafts
• D) pledge accounts receivable as specific collateral for an additional loan

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Definitions:

Anticipate

To expect or predict something based on current knowledge or trends, often involving preparation for a known event or condition.

Compounded Semi-annually

The process of applying interest to an initial sum and the accrued interest on that sum every six months.

Scheduled Payments

Pre-arranged agreements to pay a certain amount at specific times, often used in loans and financial agreements.

Equivalent

Equal in value, amount, function, meaning, or status.