Loan Capital: Terminologies Used - SS2 Accounting Past Questions and Answers - page 1
What is the principal in loan capital?
The percentage of the principal that the lender charges the borrower as a fee
The original amount of money that a company borrows
The length of time over which the loan must be repaid
What is collateral in loan capital?
The frequency and amount of each payment that the borrower must make to repay the loan
An asset that the borrower pledges as security for the loan
Terms and conditions that the lender imposes on the borrower to ensure repayment
What is amortization in loan capital?
The process of spreading out the repayment of a loan over a set period of time
The date on which the borrower must repay the entire loan balance
The process of taking out a new loan to pay off an existing loan
What are covenants in loan capital?
The original amount of money that a company borrows
The frequency and amount of each payment that the borrower must make to repay the loan
Terms and conditions that the lender imposes on the borrower to ensure repayment
What is the maturity date in loan capital?
The percentage of the principal that the lender charges the borrower as a fee
The length of time over which the loan must be repaid
The date on which the borrower must repay the entire loan balance
Define loan capital.
Loan capital refers to the funds that a company borrows from lenders, which must be repaid with interest.
What is refinancing in loan capital?
Refinancing is the process of taking out a new loan to pay off an existing loan. This may be done to take advantage of lower interest rates or to extend the loan term.