Question

Which of the following is TRUE about a promissory note? It makes the borrower personally liable for the debt. It may not be executed in connection with a real estate loan. It is an agreement to perform or not to perform certain acts. It is a guarantee by a government agency.

Answer 1

Answer:

It makes the borrower personally liable for the debt.

Explanation:

A promissory note sometimes referred to as a note payable, is a legal instrument or financial instrument in which one party (maker or issuer) promises in writing to pay a determinate or definite sum of money to the other (the payee) either at a specified or determinable future time or on demand of the payee under specific terms.

It allows companies and individuals to get financing from a source other than a bank. This source can be an individual or a company willing to carry the note and provide the financing under agreed upon terms.

It typically contains all the terms pertaining to indebtedness, such as:

* Principal amount

* Interest rate

* Maturity date

* Date and place of issuance, and,

* Signatures.

One's promissory note could include a personal guarantee and once you sign, you are personally responsible for the loan.

Negotiable promissory notes also called mortgage notes are used extensively in financing of real estate transactions.

A promissory note is an agreement to perform certain acts for financing.

A promissory note is not a guarantee from government agencies but guarantee may be extended in some cases.

Therefore the option that best suits this question is option A, it makes the borrower personally liable for the debt.