Question

Please match the terms relating to the basic terminology and concepts.

Seasonal Dating _____    A. If the borrower cannot repay the loan, the lender can liquidate certain assets

Collection Policy _____    B. Customers can pay less than the full invoice amount if they pay within a certain number of days.

Credit Standards _____ C. A borrower is required to hold a certain amount of money in an account at the lender's institution.

Cash Discounts _____ D. Benefits can be used to repay a loan in the case of the death of an owner or important employee.

Loan Guarantees _____    E. A firm has particular requirements that must be met before credit is extended to customers.

Collateral    _____    F. This type of discount is used most often in seasonal businesses.

Key-person Insurance _____ G. A firm has certain procedures to deal with past-due accounts.

Discount interest loan _____    H. This is used by banks to assure payment of loans to privately held companies.

Compensating balances _____ I. To estimate the annual rate, divide the interest paid by half the amount received.

Add-on interest _____ J. This is a loan in which the borrower prepays the interest.

Answer 1

(A) If the borrower cannot repay the loan, the lender can liquidate certain assets = COLLATERAL

(B) Customers can pay less than the full invoice amount if they pay within a certain number of days = Cash discount

(C) A borrower is required to hold a certain amount of money in an account at the lender's institution = Compensating balances

(D) Benefits can be used to repay a loan in the case of the death of the owner or important employee = Key person insurance

(E) A firm has particular requirements that must be met before credit is extended to customers = Credit standards

(F) This type of discount is used most often in seasonal businesses = Seasonal dating

(G) A firm has certain procedures to deal with past due accounts = Collection policy

(H) This is used by banks to assure payments of loans to privately held companies = Loan Guarantees

(I) To estimate the annual rate, divide the interest paid by half the amount received = Add-on interest

(J) This is a loan in which the borrower prepays the interest = Discount interest loan