Which of the Following Is a Key Difference Between a Line

question 14

Multiple Choice

Which of the following is a key difference between a line of credit and a revolving credit agreement?

• A)Under a line of credit, the bank involved agrees to make funds available as long as the borrower's credit rating doesn't deteriorate, while in a revolving credit agreement, the bank guarantees that the funds will be available.
• B)Under a line of credit, funds are available for up to a year, while in a revolving credit agreement, funds are available for no more than 90 days.
• C)Under a line of credit, the interest rate on borrowed funds is stated in advance, while in a revolving credit agreement, the interest rate is allowed to "float" based on agreed-upon criteria.
• D)Under a line of credit, the borrower must secure the funds by pledging collateral, but in a revolving credit agreement, the bank involved agrees to make additional funds available as long as the principal and interest are paid.

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