Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
What is the difference between a line of credit and a short-term loan?
Expert Solution
Step 1
Short term loan:
A loan is borrowed money that is to be paid back along with the interest.
A short-term loan is borrowed to address the short-term requirements of the company where the capital borrowed and repaid within a set due date or within a year.
Once the payment is completed as per the repayment schedules the loan account is closed. And if the borrower requires the amount, he must reapply for the new loan.
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