What are some of the major sources of short-term financing, and how are interest rates on these loans quoted?

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What are some of the major sources of short-term financing, and how are interest rates on these loans quoted?



Answer: A major source of short-term financing is bank loans. Often, firms pay a regular fee for a LINE OF CREDIT that allows them to borrow from the bank up to an agreed amount. The interest rate on short-term bank loans is usually quoted as a simple interest rate (or APR). Sometimes the interest rate is quoted as a discount, so that the interest is deducted up front. Two other important sources of short-term financing.

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