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:

Discontinue Funding

The act of stopping the provision of financial resources to a project, initiative, or company.

Valuations

The process of determining the current worth of an asset or a company, often used in financial analysis and investment decisions.

Private Companies

Businesses that are owned privately by individuals, groups, or families, and whose shares are not traded publicly on stock exchanges.

Standard Methodologies

Established, regular procedures or techniques used across a particular industry or field.