Question

what is an unsecured line of credit?
a. a line of credit which does not require collateral.
b. a line of credit with a variable interest rate.
c. a line of credit offered by an institution other than a bank, such as a department store.
d. a line of credit offered to an individual with no credit history.

Explanation:

Define unsecured credit

Unsecured credit refers to any loan or line of credit that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral.

Analyze the options

• Option a: Correctly defines "unsecured" as not requiring collateral.
• Option b: Describes an interest rate structure, not security.
• Option c: Describes a retail or store credit line, not the security status.
• Option d: Describes a credit history condition, which is unrelated to whether collateral is required.

Answer:

• (a) A line of credit which does not require collateral. (Correct answer)
• (b) A line of credit with a variable interest rate.
• (c) A line of credit offered by an institution other than a bank, such as a department store.
• (d) A line of credit offered to an individual with no credit history.