A ________ Type of Loan Is Similar to a Line

question 112

Multiple Choice

A ________ type of loan is similar to a line of credit.However,even though only a portion of the loan is available to the borrower,interest is paid on the entire face value of the loan.

• A)line of credit
• B)compensating balance loan
• C)straight loan with preset payment schedule
• D)discount loan

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Definitions:

Times Interest Earned Ratio

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Inventory Turnover

A measure of how quickly a company sells its inventory within a given period, indicating the efficiency in managing and selling products.

Carrying Amount

The book value of an asset or liability; for assets, it's typically the original cost less any depreciation.

Face Value

The nominal value stated on a financial instrument, such as a bond or stock certificate, representing its legal value.