A short-term loan secured by the borrower's inventory,either directly or via an intermediary,is called a(n):
A) debenture.
B) line of credit.
C) banker's acceptance.
D) compensating balance.
E) inventory loan.

Question

Quizplus · Accepted Answer

An inventory loan is a short-term loan secured by the borrower's inventory, either directly or via an intermediary. Therefore, option E is the correct choice. Debenture is a long-term unsecured loan, a line of credit is a pre-approved amount of credit the borrower can use when needed, a banker's acceptance is a type of financial instrument used to facilitate international trade, and a compensating balance is a minimum balance that a borrower must maintain in a bank account as a condition of obtaining a loan. None of these options accurately describe a loan that is secured by the borrower's inventory.

A Short-Term Loan Secured by the Borrower's Inventory,either Directly or Via