Loan Capital: Terminologies Used - SS2 Accounting Past Questions and Answers - page 1
1
What is the principal in loan capital?
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A
The percentage of the principal that the lender charges the borrower as a fee
B
The original amount of money that a company borrows
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C
The length of time over which the loan must be repaid
2
What is collateral in loan capital?
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A
The frequency and amount of each payment that the borrower must make to repay the loan
B
An asset that the borrower pledges as security for the loan
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C
Terms and conditions that the lender imposes on the borrower to ensure repayment
3
What is amortization in loan capital?
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A
The process of spreading out the repayment of a loan over a set period of time
B
The date on which the borrower must repay the entire loan balance
C
The process of taking out a new loan to pay off an existing loan
4
What are covenants in loan capital?
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A
The original amount of money that a company borrows
B
The frequency and amount of each payment that the borrower must make to repay the loan
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C
Terms and conditions that the lender imposes on the borrower to ensure repayment
5
What is the maturity date in loan capital?
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A
The percentage of the principal that the lender charges the borrower as a fee
B
The length of time over which the loan must be repaid
C
The date on which the borrower must repay the entire loan balance
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