Final answer:
Notes receivable provide a stronger legal claim than an account because they are accompanied by a promissory note, which is a formalized commitment to pay a certain amount by a specific date and is backed by the legal system. Therefore, the correct option is C.
Step-by-step explanation:
Because it involves a promissory note, notes receivable offers a stronger legal claim than an account. A promissory note is a financial instrument that contains a written promise by one party (the issuer or maker) to pay another party (the payee) a definite sum of money, either on demand or at a specified future date. Notes receivable represent stronger legal claims because they are formalized through these promissory notes which include details like the maturity date, interest rate, and the obligation of the issuer to repay the debt which gives them the solidity in financial transactions.
In evaluating the value of a loan or a bond, factors such as the borrower's repayment history, current market interest rates, the financial stability of the borrower, and changes in the economy's interest rates affect the present value of the financial instrument. For example, if a borrower has been late on payments, the value of the loan is less. If the borrower is stable and profitable, the loan is worth more, especially if market interest rates have fallen, making an older, higher-interest loan more valuable.