All of the Following Would Be Generally Be Considered Acceptable

question 20

Multiple Choice

All of the following would be generally be considered acceptable commercial loan purposes except:

• A) seasonal cash needs.
• B) paying off other bank debts.
• C) purchasing new equipment.
• D) acquiring another firm.
• E) expanding plant capacity.

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Definitions:

Trade or Business

An activity carried out for the purpose of earning income or profit, involving regularity and continuity in operations.

Security

A financial instrument representing an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Net Losses

Refers to the situation where a company's expenses exceed its revenues for a given period, resulting in a negative profit.