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Match the Term with Its Definition

Question 101

Matching

Match the term with its definition.

Premises:

Responses:

Bank-imposed restrictions on a borrower that enhance the chance of timely repayment

Factoring

Obtaining cash from a lender who, for a fee, advances the amount of the borrower's cost of goods sold for a specific customer order

Balloon payment

The sale of a firm's capital stock to select individuals

LIBOR (London InterBank Offered Rate)

The interst rate charged by London banks on loans to other London banks

Private placement

The issuance of stock to be traded in public financial markets

Real estate mortgage

1/100th of 1 percent when quoting an interest rate

Basis point

A long-term loan with real property held as collateral

Purchase-order financing

An informal agreement between a borrower and a bank as to the maximum amount of funds the bank will provide an any one time

Prime rate

Private individuals who invest in others' entrepreneurial ventures

Chattel mortgage

A very large payment required about halfway through the term over which payments were calculated, repaying the loan balance in full

Initial public offering

A line of credit secured by working capital assets

Asset-based loan

Money loaned for a 5-to 10-year term, corresponding to the length of time the investment will bring in profits

Crowdfunding

The interest rate chareged by commercial banks on loans to their most creditworthy customers

Equipment loan

A loan for which items of inventory or other movable property serve as collateral

Venture capitalist

The process of raising very small investments from a large number of investors via the Internet

Term loan

Obtaining cash by selling accounts receivable to another firm

Line of credit

An installment loan from a seller of machinery used by a business

Business angels

Loan covenants

Premises:

Bank-imposed restrictions on a borrower that enhance the chance of timely repayment

Obtaining cash from a lender who, for a fee, advances the amount of the borrower's cost of goods sold for a specific customer order

The sale of a firm's capital stock to select individuals

The interst rate charged by London banks on loans to other London banks

The issuance of stock to be traded in public financial markets

1/100th of 1 percent when quoting an interest rate

A long-term loan with real property held as collateral

An informal agreement between a borrower and a bank as to the maximum amount of funds the bank will provide an any one time

Private individuals who invest in others' entrepreneurial ventures

A very large payment required about halfway through the term over which payments were calculated, repaying the loan balance in full

A line of credit secured by working capital assets

Money loaned for a 5-to 10-year term, corresponding to the length of time the investment will bring in profits

The interest rate chareged by commercial banks on loans to their most creditworthy customers

A loan for which items of inventory or other movable property serve as collateral

The process of raising very small investments from a large number of investors via the Internet

Obtaining cash by selling accounts receivable to another firm

An installment loan from a seller of machinery used by a business

Responses:

Factoring

Balloon payment

LIBOR (London InterBank Offered Rate)

Private placement

Real estate mortgage

Basis point

Purchase-order financing

Prime rate

Chattel mortgage

Initial public offering

Asset-based loan

Crowdfunding

Equipment loan

Venture capitalist

Term loan

Line of credit

Business angels

Loan covenants

Correct Answer:

Premises:

Responses:

Factoring

Balloon payment

LIBOR (London InterBank Offered Rate)

Private placement

Real estate mortgage

Basis point

Purchase-order financing

Prime rate

Chattel mortgage

Initial public offering

Asset-based loan

Crowdfunding

Equipment loan

Venture capitalist

Term loan

Line of credit

Business angels

Loan covenants