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Which of the following is an example of long-term borrowing? (A) Bank bills (B) Grants (C) Mortgage (D) Overdraft - HSC - SSCE Business Studies - Question 1 - 2001 - Paper 1
Question 1
Which of the following is an example of long-term borrowing? (A) Bank bills (B) Grants (C) Mortgage (D) Overdraft
Worked Solution & Example Answer:Which of the following is an example of long-term borrowing? (A) Bank bills (B) Grants (C) Mortgage (D) Overdraft - HSC - SSCE Business Studies - Question 1 - 2001 - Paper 1
Step 1
Identify long-term borrowing options
Answer
To determine which option represents long-term borrowing, we must differentiate between types of borrowing. Long-term borrowing typically refers to funds borrowed for a period longer than one year.
- Bank bills are generally short-term instruments, often maturing within a year.
- Grants are funds given without needing to be paid back, not a borrowing form.
- Mortgage is a type of long-term borrowing used to purchase property, repayable over many years.
- Overdraft refers to a bank facility allowing account holders to withdraw more than their available balance, which is also typically short-term.
From this analysis, the correct answer is Mortgage.