Question

A ________ is a lending tool the company can use to draw money as needed at a specified rate of interest, for a specified amount of time, paying on the actual amount owed instead of a closed-end note.

Answer 1

Answer: Line of credit

Step-by-step explanation:

A line of credit is a credit facility that is extended by a financial institution e.g a bank to an individual, firm or government, that enables the economic agent to draw on the credit facility when the individual or firm needs funds.

A line of credit takes different forms, such as demand loan, discounting, overdraft limit, export packing credit, special purpose, term loan, purchase of commercial bills etc. The line of credit is a source of funds that can be used at the discretion of the borrower. Lines of credit can either be unsecured or secured by collateral.

Answer 2

The correct word for the blank space is: line of credit.

Step-by-step explanation:

Line of credit refers to the maximum amount an individual or organization has available in a credit card or loan. It is determined by the credit history of the borrower implying the higher the income of the individual or organization, the higher the line of credit.

Withdrawing money from a line of credit implies paying an interest rate for a determined amount of time in addition to the principal of the loan. The term is usually determined by the borrower at the moment of purchasing.