A Promissory Note and a Security Agreement

question 68

Multiple Choice

A promissory note and a security agreement

• A)must go together on any consumer loan.
• B)are actually the same thing one is used with a credit card while the other applies to a cash loan.
• C)are different the promissory note shows details of the loan while the security agreement gives the creditor an interest in the collateral supporting the loan.
• D)are part of the loan agreement the borrower gives a promissory note and in return receives a security.

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Definitions:

Investing Value

A measure of the worth of an investment, typically considering its return potential and risk.

Historical Value

An accounting practice of recording assets on the balance sheet at their original cost, without adjustments for inflation or market changes.

Asset

Resources owned by a company or individual that have economic value and can be converted into cash.

Parent-subsidiary Relationship

A corporate structure where one company (the parent) controls another company (the subsidiary) typically through ownership of a majority of its shares.