Which of the Following Statements Regarding Lines of Credit Is

question 15

Multiple Choice

Which of the following statements regarding lines of credit is FALSE?

• A)The line of credit agreement may also stipulate that at some point in time the outstanding balance must be zero.This policy ensures that the firm does not use the short-term financing to finance its long-term obligations.
• B)A revolving line of credit is an uncommitted line of credit that involves an informal agreement from the bank for a longer period of time,typically two to three years.
• C)The line of credit may be uncommitted,meaning it is an informal agreement that does not legally bind the bank to provide the funds.
• D)A revolving line of credit with no fixed maturity is called evergreen credit.

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Definitions:

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