A Credit Line on Which a Borrower Can Both Draw

question 29

Multiple Choice

A credit line on which a borrower can both draw and repay many times over the life of the loan contract is called a:

• A)reviving loan
• B)revolving loan
• C)refilling loan
• D)A credit line does not exist.

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Definitions:

Principal

Principal refers to the original sum of money borrowed in a loan or invested, exclusive of any interest or dividends.

Annual Payments

Periodic payments made once every year, often used in terms of loans, insurance, and investments.

Outstanding Balance

The amount of money owed on a loan or credit line that has not yet been repaid.

Single Premium Annuity

A financial product where a lump sum payment is made initially in exchange for a series of payments that will be received at future dates.