Which of the following statements about loan terminology is correct?
A)Loan covenants are the collateral provided by a borrower to a lender as security on a loan.
B)A secured loan means that the borrower has a pre-approved line of credit backing the debt.
C)Lenders can revise loan terms if a borrower violates a loan covenant.
D)All companies are able to establish lines of credit which will allow them to borrow money as needed,up to a prearranged limit.

Question

Quizplus · Accepted Answer

A loan covenant is a provision in a loan agreement that requires the borrower to operate within certain limits.Breach of a loan covenant often allows the lender to renegotiate the terms of the loan including its due date.A secured loan is backed with collateral,not a line of credit.A line of credit,that allows a company to borrow money at any time,up to a pre-arranged limit,is not necessarily available to all companies.

Which of the Following Statements About Loan Terminology Is Correct