A type of short-term loan where the borrower sells its receivables to the lender up-front,but at a discount to face value,is called:
A)a compensating balance.
B)assigned receivables financing.
C)a letter of credit.
D)factored receivables financing.
E)a bond.

Question

Quizplus · Accepted Answer

Factored receivables financing involves the borrower selling its receivables to the lender at a discount to face value. The lender assumes the risk of collecting the full amount from the customers. This provides the borrower with immediate cash flow but at a cost of the discount applied to the receivables.

A Type of Short-Term Loan Where the Borrower Sells Its