Final answer:
A promissory note is a financial document that promises the repayment of a loan on a specific date. Collateral and cosigners are methods to secure a loan and reassure lenders. An insurance premium is the payment made for insurance coverage.
Step-by-step explanation:
The term defined as a written promise to repay a specific amount of money on a certain date is a promissory note. A promissory note is an important financial document in which a borrower agrees to pay back a lender according to agreed terms.
This note includes information such as the principal amount of the loan, the interest rate, and the maturity date. In contrast, collateral refers to valuable property or assets that act as security for a loan, which the lender may seize if the debt is not repaid. A cosigner is someone who pledges to pay back the loan if the primary borrower defaults.
In relation to obtaining loans, banks may face imperfect information about a borrower's ability to repay. To mitigate this risk, the borrower can offer collateral, involve a cosigner, or make a significant down payment to reassure the bank. Moreover, an insurance premium is the amount an individual or business pays for an insurance policy.