Banks responded to their loss of borrowers to the commercial paper market by offering

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Standby letters of credit were offered by banks as a response to their loss of borrowers to the commercial paper market. Standby letters of credit are similar to guarantees that the bank will make payment to the beneficiary in the event that the applicant cannot or does not make payment. This provides security to the borrower and encourages them to choose bank financing instead of commercial paper. Choices B, C, and D are not directly related to the loss of borrowers to the commercial paper market.

Banks Responded to Their Loss of Borrowers to the Commercial