Financial Awareness - Risk, Stability & Emerging Finance
Which of the following loans is typically granted for a fixed period and used primarily for purchasing fixed assets like machinery or land?
Which of the following loans is typically granted for a fixed period and used primarily for purchasing fixed assets like machinery or land?
medium Q5 of 15
Step-by-Step Solution
Step 1: Identify loan for fixed assets
Term Loan is granted for a fixed tenure to finance fixed assets such as machinery or land.Step 2: Differentiate from other loans
Cash Credit and Overdraft are short-term working capital loans; Demand Loan is repayable on demand.Final Answer:
Term Loan → Option AQuick Check:
Term Loan = fixed period for fixed assets purchase ✅
Quick Trick: Term Loan = fixed tenure for capital assets.
Common Mistakes:
- Confusing Term Loan with Cash Credit or Overdraft.
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