The Primary Difference Between a Line of Credit and a Revolving

question 45

Multiple Choice

The primary difference between a line of credit and a revolving credit arrangement is the:

• A)type of collateral used to secure the loan.
• B)length of the credit period.
• C)fact that the line of credit is a secured loan and the revolving credit arrangement is unsecured.
• D)fact that the line of credit is an unsecured loan and the revolving credit arrangement is secured.
• E)classification as either a committed or a noncommitted loan.

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Definitions:

Instrument

A formal legal document that records a legally enforceable act, transaction, or agreement.

Bearer Instrument

A negotiable financial instrument that denotes ownership to whoever physically holds it.

Theft

The act of unlawfully taking someone else's property with the intent to permanently deprive them of it.

Negotiability

The characteristic of a written document (such as a check or bill of exchange) that ensures its transferability by endorsement or delivery.