Which of the Following Is True of a Line of Credit

question 8

Multiple Choice

Which of the following is true of a line of credit?

• A)It is a short-term,zero-coupon note issued by major corporations.
• B)It is an arrangement in which the firm is allowed to pay down the loan and then subsequently increase the amount of borrowing.
• C)It is an arrangement where the bank will lend up to a maximum pre-specified loan amount at a pre-specified interest rate,as long as the firm meets the requirements established initially.
• D)It is an arrangement with a bank whereby the bank authorizes the maximum loan amount,but not the interest rate,when commitment was drawn up.

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Definitions:

Tension Reduction

A psychological process or technique aimed at decreasing stress or anxiety levels in an individual, often through relaxation or problem-solving strategies.

Biological Factors

Components and influences stemming from the biological level, such as genetics, neurochemical imbalances, and brain structure, affecting an individual's health and behavior.

Social Factors

External societal influences that affect an individual's behavior, attitudes, and life chances.

Incentive

A factor, often a reward or punishment, that motivates behavior or increases the likelihood of a certain response.