As a shortterm credit arrangement, banks sometimes extend _____, which are guaranteed lines of credit in which the borrowing firm pays a commitment fee on the unused portions of the funds the bank has committed.
A) term loans
B) revolving credit agreements
C) trade credits
D) commercial papers

Question

As a short­term credit arrangement, banks sometimes extend _____, which are guaranteed lines of credit in which the borrowing firm pays a commitment fee on the unused portions of the funds the bank has committed.
A) term loans
B) revolving credit agreements
C) trade credits
D) commercial papers

Quizplus · Accepted Answer

The description matches the definition of revolving credit agreements, in which a commitment fee is paid on the unused portion of the funds committed by the bank. Term loans are not revolving, trade credits do not involve guaranteed lines of credit or commitment fees, and commercial papers are a type of short-term debt issued by corporations, not guaranteed lines of credit provided by banks.

As a Short­term Credit Arrangement, Banks Sometimes Extend _____, Which

As a Shortterm Credit Arrangement, Banks Sometimes Extend _____, Which