Certified Medical Administrative Assistants (CMAA) Practice Exam 2025 - Free CMAA Practice Questions and Study Guide

In the context of open-book accounts, the characteristic of unsecured credit extension is a defining feature. Open-book accounts are typically informal arrangements where a customer can make purchases on credit without the necessity of a formal contract. This means that the credit extended is not secured against any collateral; rather, it is based on the trustworthiness of the customer or the established relationship between the seller and the buyer.

Unsecured credit allows for flexibility in transactions and is common in various business dealings, allowing customers to buy goods and services with payment promised later. This arrangement contrasts with secured credit, where collateral is required to minimize risk for the lender.

In contrast, other options like formal contracts or strict credit limits do not apply to open-book accounts, as they usually allow for ongoing purchases based on the relationship rather than specific contract terms or strictly defined limits. Similarly, prepayment penalties are typically associated with secured loans rather than open-book accounts, which are usually more flexible and customer-friendly.