Loan Types & Collateral

Question 1

What is an interest rate swap?
a. A futures contract in which one stream of future interest payments is exchanged for another based on a specified principal amount.
b. A forward contract in which one stream of prior interest payments is exchanged for another based on a specified principal amount.
c. A forward contract in which one stream of future interest payments is exchanged for another based on a specified principal amount.
d. A futures contract in which one stream of prior interest payments is exchanged for another based on a specified principal amount.

Answer 1

c. A forward contract in which one stream of future interest payments is exchanged for another based on a specified principal amount.

Question 2

What is a Term Loan?
a. A lump-sum loan with an agreed schedule for repayment.
b. A revolving line of credit with an agreed schedule for repayment.
c. A lump-sum loan with a flexible schedule for repayment.
d. A revolving line of credit with a flexible schedule for repayment.

Answer 2

a. A lump-sum loan with an agreed schedule for repayment.

Question 3

Why would a company choose a term loan?
a. Simple application process
b. Receiving an upfront lump sum of cash
c. Specified payments
d. Lower interest rates
e. All of the above

Answer 3

e. All of the above

Question 4

Which of the following are not reasons a Company would choose a term loan (select all that apply)?
a. Simple application process
b. Receiving an upfront lump sum of cash
c. Volatile payment structure
d. Lower interest rates
e. Higher interest rates
f. Specified Payments
g. Thorough and detailed application process

Answer 4

c. Volatile payment structure
e. Higher interest rates
g. Thorough and detailed application process

Question 5

Which of the following are reasons a Company would choose a term loan (select all that apply)?
a. Simple application process
b. Receiving an upfront lump sum of cash
c. Volatile payment structure
d. Lower interest rates
e. Higher interest rates
f. Specified Payments
g. Thorough and detailed application process

Answer 5

a. Simple application process
b. Receiving an upfront lump sum of cash
d. Lower interest rates
f. Specified Payments

Question 6

Which of the following are types of Term Loans?
a. Short-Term Loans
b. Fixed-to-floating Interest Rate Swaps
c. HELOC
d. Credit Card
e. Intermediate-Term Loans
f. Floating-to-fixed Interest Rate Swaps
g. Long-term Loans
h. Float-to-Float Interest Rate Swaps

Answer 6

a. Short-term Loans
e. Intermediate-term Loans
g. Long-term Loans

Question 7

What is an example of a Term Loan?

Answer 7

SBA (Small Business Administration) Loans; Long-term financing