Key Features of Bank Overdraft Steps:

• Recall bank overdraft as short-term credit allowing account balance to go negative up to a limit.
• Identify true traits: interest charged only on overdrawn amount; flexible for immediate cash needs without formal loan process.
• Evaluate statements: 1 likely false (e.g., not a long-term facility); 2 true (interest on overdrawn balance); 3 false (no collateral typically needed); 4 true (short-term, revolving credit).
• Confirm combination: statements 2 and 4 align with definitions.

Why D is correct:

• Bank overdraft charges interest solely on the overdrawn amount per standard banking law, and it's designed for flexible short-term borrowing without fixed terms.

Why the others are wrong:

• A: Includes 1 (false, as overdrafts are short-term, not long-term).
• B: Includes 1 (false, overdrafts rarely require collateral for personal accounts).
• C: Includes 3 (false, collateral not standard for unsecured overdrafts).

Final answer: D