A Petroleum Exploration Company Takes a Short-Term Bank Loan in Order

question 95

Multiple Choice

A petroleum exploration company takes a short-term bank loan in order to finance the purchase of several truck-mounted, vibroseis shakers, which have unexpectedly come onto the market at a good price. Once the purchase is made, the company will obtain long-term financing. Which of the following best describes the short-term loan the company has taken?

• A) a single, end-of-period payment loan
• B) a promissory note
• C) a bridge loan
• D) an uncommitted line of credit

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Definitions:

Alfred Marshall

A British economist, known for his significant contributions to classical economics, especially his work on the principles of economics, including the theories of supply and demand.

Marginal Utility

The additional satisfaction or utility gained by consuming one more unit of a good or service, which typically decreases with each additional unit consumed.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, indicating the benefit received by consumers from participating in the market.

Utility

The satisfaction you derive from a good or service that you purchase. How much utility you derive is measured by how much you would be willing to pay.