As a Short-Term Arrangement,banks Sometimes Extend Guaranteed Lines of Credit

question 124

Multiple Choice

As a short-term arrangement,banks sometimes extend guaranteed lines of credit in which the firm pays a commitment fee on unused portions of the funds the bank has committed.Which of the following describes these arrangements?

• A)revolving credit agreements
• B)trade credit
• C)short-term bank loans
• D)commercial paper

---

Definitions:

Insurable Interest

A stake in the value of an entity or event for which an insurance policy may be obtained to cover losses.

Insurance Contract

A legally binding agreement between an insurer and an insured, where the insurer promises to pay benefits for specific potential future losses in exchange for premiums paid by the insured.

Risk Assessment

The identification, evaluation, and prioritization of risks followed by coordinated efforts to minimize or control their impact.

Indemnity

A contractual obligation of one party to compensate the loss incurred by another party due to the acts of the indemnitor or another party.