Chapter 16- Part 3 Quiz

What is the purpose of savings and checking accounts according to the text?

• To provide loans to businesses

• To provide a safe place to store money a business doesn’t immediately need

• To invest in stocks and bonds

• To pay employees and other operational costs

What is a Certificate of Deposit (CD)?

• A loan provided by the bank to a business

• A document stating that the bank will pay the depositor a guaranteed interest rate on money left on deposit for a specified period of time

• A credit card issued by the bank

• A type of insurance policy for businesses

Why might a business choose to deposit money in a checking account?

• To earn a high rate of interest on excess cash

• To secure a loan from the bank

• To write checks to pay for purchases

• To invest in the bank's financial products

What is a short-term business loan?

• A loan that must be repaid over a period of years

• A loan that is approved after the money is needed

• A loan that must be repaid within one year or less

• A loan that requires real estate as security

What is a line of credit?

• A loan that requires collateral

• A loan that is approved before the money is actually needed

• A guaranteed line of credit

• A loan that must be repaid within two years

What is a revolving credit agreement?

• A loan that must be repaid within one year or less

• A loan that is approved after the money is needed

• A guaranteed line of credit

• A loan that requires real estate as security

What is typically required as collateral for long-term business loans?

• A personal guarantee

• A short-term business loan

• Real estate or property pledged as security for a loan

• A revolving credit agreement

Before requesting a loan, it is important to:

• Consult with a financial advisor exclusively.

• Know potential lenders.

• Immediately fill out a loan application.

• Only compile a list of references.

When applying for a loan, what should you provide along with the loan application?

• A handwritten note
• A recipe for chocolate cake
• Documents such as proof of income, identification, credit history, and any other relevant financial information requested by the lender.
• A drawing of your dream house

According to Table 16-2, which payment option is preferred by the highest percentage of people?

• Debit cards

• Cash

• Credit cards

• Electronic payments