Which of the Following Is True of the Lines of Credit

question 93

Multiple Choice

Which of the following is true of the lines of credit type of short-term bank loans?

• A)Banks typically charge a fee,on top of interest,for lines of credit agreements.
• B)It specifies the maximum amount the firm can borrow over a period of time,usually a year.
• C)The bank is obliged actually to lend the money,even if there is a shortage of funds.
• D)The borrower compulsorily has to repay the original amount,plus interest,within six months.

---

Definitions:

Book Value

The value of an asset as it appears on a company's balance sheet, calculated as the cost of the asset minus any depreciation, amortization, or impairment costs already applied.

Equity Capital

Equity capital is the amount of money that is invested into a company by its owners in exchange for shares of ownership.

Competitive Dynamics

The ongoing actions and responses between companies competing within the same market or industry.

Future Free Cash Flows

Projected amounts of cash that a company will generate after accounting for capital expenditures, which are available for distribution to stakeholders.