The financial manager of Caroline Graphics negotiated a ______with her bank that allows Caroline to borrow up to $50,000 without collateral.This arrangement eliminates the need to renegotiate the terms of the loan and complete new paper work each time Caroline borrows money.The preapproved loan agreement is contingent upon the bank having the funds available.
A)line of credit
B)renewable income option
C)cash flow conversion
D)factor agreement

Question

Quizplus · Accepted Answer

A line of credit is a preapproved loan agreement that allows the borrower to borrow up to a certain limit without needing to provide collateral. This arrangement also eliminates the need to complete new paperwork each time the borrower needs to borrow money. The availability of funds is contingent upon the lender having the necessary funds to lend. A renewable income option and factor agreement are not relevant to this scenario. Cash flow conversion is a process of converting non-cash assets into cash, which is also not relevant to this scenario.

The Financial Manager of Caroline Graphics Negotiated a ______With Her