Category Development,a leader in residential housing,recently negotiated a financing arrangement with TD Bank.The short-term funding agreement guarantees a specified amount of funds would be made available upon Category Development's request.This arrangement represents a:
A)contingency reserve.
B)pledging agreement.
C)revolving credit agreement.
D)line of credit.

Question

Quizplus · Accepted Answer

A revolving credit agreement is a type of financing arrangement that provides a specific amount of funds that can be accessed as needed. It is often used for short-term financing and allows the borrower to draw upon the credit line multiple times as long as they do not exceed the agreed-upon limit. This arrangement is similar to a line of credit but differs in that it provides a predetermined amount of funds rather than a maximum credit limit. Therefore, the financing agreement between Category Development and TD Bank is best classified as a revolving credit agreement.

Category Development,a Leader in Residential Housing,recently Negotiated a Financing Arrangement