What is the difference between a line of credit and a short-term loan?

Q: Finding the total interest of a loan is similar to finding the total interest in an annuity's

A: When you take a loan then you have to make payments towards the principal amount as well as towards…

Q: the lending operation, how many types of loans security?

A: In lending operations banks for their safety of loans ask  for some collateral.You have to provide…

Q: Why is it important to set a credit limit?

A: Solution:- Given, Credit Limit :- The term credit limit refers to the maximum amount of credit a…

Q: Give and explain the factors that affect the interest rate on the loan

A: Following are the factors that affect interest rate on the loan:  1. Supply and Demand Interest…

Q: The payment for the use of borrowed money is called: loan maturity value interest principal

A: Borrowed money is the loan taken, which is to be repaid within the terms of the loan contract.

Q: What is the difference between a credit sale (with a higher price as compared to the cash sale) and…

A: The amount of Sales made in credit has to be collected after certain period of time. In case of cash…

Q: The time value concept/calculation used in amortizing a loan is

A: Time value of money (TVM) means that the amount of money received in the present period will have…

Q: For a creditor; how is a loan impairment recorded?

A: Creditors:   They are the outside entities to whom the business owes money for any product or a…

Q: Bank loans often are arranged under existing lines of credit. What is a line of credit? How does a…

A: LiabilitiesLiabilities are referred to as the obligations of the business towards the creditors for…

Q: From the standpoint of a borrower, is long-term or short-term credit riskier? Explain

A: credit risk is define as the chances of a loss due to  borrower's failure to repay obligation in…

Q: Bank loans often are arranged under existing lines of credit. What is a line of credit? How does a…

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Q: What is the process of calculating the remaining balance of different types of loans?

A: The remaining balance of a credit plan equation can be part of two sections, the future estimation…

Q: What does “assignment” mean and why would a lender want to assign a mortgage loan?

A: Mortgage assignments refer to a document that shows that a mortgage is transferred from the original…

Q: When would there be a discount on a loan? How about a premium?

A: The loan is purchased to finance the purchase of equipment, education purposes, the purchase of…

Q: What is the indifference point under the net present value? When would there be a discount on a…

A: SOLUTION- NET PRESENT VALUE = PRESENT VALUE OF CASH INFLOW - PRESENT VALUE OF CASH OUTFLOW.

Q: Explain mezzanine loan?

A: Mezzanine financing is a blend of both debt and equity financing. It is a way for firms to raise…

Q: Does a Discounted Note Payable provide credit without interest?

A: Discounted Note Payable means that the purchase price(PV) is less than the maturity/face value(FV)…

Q: How commercial loans and mortgages are structured in terms ofinterest and principal payments.

A: Commercial loan, as well as a mortgage, are being structured in terms of interest and principal…

Q: What is meant by a “purchase-money” mortgage loan? When could a loan not be a purchase-money…

A: A purchase-money mortgage loan is a loan that home sellers provide to the buyers of the home. Buyers…

Q: Explain how an installment loan differs from revolving credit in terms of risk and the nature of the…

A: Installment credit is a type of loan in which the borrower receives a defined, or limited, sum of…

Q: types of credit extension? which one is the biggest?

A: Different types of credit extensions are a) Personal loans-granted to individuals on the basis of…

Q: What are the 5 Cs of credit that are sometimes used by bankers and others to determine whether a…

A: While granting credit banks do analysis of that loan amount will be repaid without any problem.

Q: How does compound interest affect the loans you undertake? For example, how would this  affect…

A: Interest is an additional value which is charged on borrowed or deposited amount. Interest can be an…

Q: Differentiate between leasing and long term bank loan as source of finance

A: Banks play an important role in financing; there are various types of bank financing one of them is…

Q: Write the different types of loans available?

A: Types of loans available as follows: Debt Consolidation Loans: A consolidation credit is intended to…

Q: What does it mean when a lender accelerates on a note? What is meant by forbearance?

A: Promissory note is written by the borrower and sent to the lender. In promissory note, borrower…

Q: If a person charges interest on a loan transaction equivalent to the inflation rate than will it be…

A: Time value of the money is the value of the money which a person must use in order to know how much…

Q: What is a compensating balance? What effect does a compensatingbalance requirement have on the…

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Q: why loan officer prefer accrual basis accounting

A: The financial statement of a firm can be prepared based on accrual basis of accounting or cash basis…

Q: what are two types of credit

A: "We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: What are spontaneous sources of short-term financing and unsecured sources of short-term loans

A: The source of funds which are having a zero cost is termed as a spontaneous source of funds. It is…

Q: What is a revolving credit agreement?

A: Credit refers to the concept is being defined as the financial agreement where the borrowers receive…

Q: What are mortgage discount points?  When does it make sense to pay points on a loan?  How can a…

A: Mortgage discount point are all such points which will be reducing the total amount of fees which an…

Q: How does a short term loan works?

A: Definition : A short term loan is a variety of loan that's obtained to support a short lived…

Q: what is the relationship between tne intrest rate and the bank prime loan rate

A: The prime rate (prime) and interest rate are both set by the Federal Reserve Bank (the Fed). In…

Q: What elements do each of the loans have in common?

A: LOAN -      A loan could be a sort of debt incurred by a personal or different entity. The…

Calculating the Return On A Loan