Which of the Following Comparisons Between Short-Term Bank Loans Is

question 34

Multiple Choice

Which of the following comparisons between short-term bank loans is correct?

• A) Commercial paper interest rates are usually slightly higher than rates on bank loans.
• B) Commercial paper is only appropriate for firms requiring a limited amount of short-term financing, while banks can offer substantially larger amounts of funds.
• C) Banks demand that borrowers meet exacting credit-worthiness tests, while the lenders that purchase commercial paper are less strict. Only the most credit-worthy borrowers have access to bank loans.
• D) Commercial paper is less flexible than a line of credit, but the interest rate is lower.

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Definitions:

Exchange Rate

The worth of one currency in terms of another for conversion purposes, showing the amount of one currency that can be swapped for a different one.