Define each of the following terms: m. Promissory note; line of credit; revolving credit agreement
Define each of the following terms:
Promissory note - It is a short-term financial instrument in which one party promises to pay another party a definite amount of money either on demand or at a specific future date.
Line of credit - A line of credit also known as a bank line is an informal or formal agreement that indicates the maximum credit limit the bank will provide to the borrower at a specified interest rate. Once the credit is sanctioned, it is not necessary that the borrower needs to withdraw the credit all at once. Rather, it can be used for the additional financing needed.
Revolving credit statement - It is a way of granting credit where a syndicate of banks comes and lends money to the borrower, who in turn is required to pay a commitment fee on the unused balance of the credit and interest on the amount borrowed.