Question

A home mortgage that can be repaid over a 30-year period is an example of:

A. a line of credit.

B. a student loan.

C. a short-term loan.

D. a long-term loan.

Answer 1

D. a long-term loan.

Step-by-step explanation:

Loans are classified based on varied parameters. There are secure and unsecured loans, installment credit and revolving credit. Also, there loans with fixed interest rates and others with variable interest rates.

Loans are also categorized depending on the duration it takes to repay them. Short term loans are those repaid with one year. For businesses, these loans are short term liabilities.

Long-term loans take longer than one year to repay. The mortgage is to be paid over 30 years period. To businesses, these loans are long-term liabilities.