C.W.Beauregard is an Atlantic salmon farmer.He produces and sells salmon to satisfy the growing demand for fish.He has arranged a business loan with terms that guarantee that he can borrow up to $12,000 whenever he needs it within the next year.He must pay interest only on the unpaid loan balance.Beauregard has arranged which type of credit?
A) a credit-line loan
B) a line of credit
C) a single-payment note
D) a collateralized loan

Question

Quizplus · Accepted Answer

The terms of the loan, which allow for borrowing up to a certain amount and paying interest only on the unpaid balance, indicate that this is a line of credit. Option A, credit-line loan, and option D, collateralized loan, do not accurately describe the terms of the loan. Option C, single-payment note, would require repayment of the entire loan amount plus interest at a specified date in the future, which is not consistent with the terms described.

CWBeauregard Is an Atlantic Salmon Farmer