Which of the following statements regarding loan terminology is true?
A) Loan covenants are the collateral provided by a borrower to a lender as security on a loan.
B) secured loan means that the borrower has a pre-approved line of credit backing the debt.
C) loan covenant allows the lender to revise loan terms if a borrower's financial condition deteriorates significantly.
D) All companies are able to establish lines of credit which will allow them to borrow money as needed, up to a

Question

Quizplus · Accepted Answer

Loan covenants are conditions set by the lender that the borrower must meet in order to maintain the terms of the loan. If the borrower's financial condition deteriorates significantly, the lender may revise the loan terms. A is incorrect because collateral is a separate concept from loan covenants. B is incorrect because a secured loan means that the borrower has provided some form of asset or property as collateral for the debt, not a pre-approved line of credit. D is incorrect because not all companies are able to establish lines of credit, as this depends on factors such as the company's creditworthiness and financial history.

Which of the Following Statements Regarding Loan Terminology Is True