Which Is True About Lines of Credit

question 46

Multiple Choice

Which is true about lines of credit?

• A)The company generally must repay the credit line in full monthly.
• B)The borrower can borrow up to an agreed upon limit.
• C)Interest is charged on the full amount of the agreed upon limit.
• D)Lines of credit are particularly useful for steady income businesses that have very little volatility in revenue.

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Definitions:

Market/Book Ratio

Also known as the price-to-book ratio, it compares a company's market value with its book value, indicating how much investors are paying for each dollar of net assets.

Stock Price

Stock price is the current market price of a share of stock, reflecting the value the market places on a company.

Book Value

The net value of a company's assets found on its balance sheet, and calculated as total assets minus intangible assets and liabilities.

Equity Multiplier

A financial ratio indicating the portion of a company's assets that are financed by stockholder's equity.