The primary difference between a line of credit and a revolving credit arrangement is the:
A)type of collateral used to secure the loan.
B)length of the time period covered by the loan agreement.
C)fact that the line of credit is a secured loan and the revolving credit arrangement is
Unsecured.
D)fact that the line of credit is an unsecured loan and the revolving credit arrangement is
Secured.
E)line of credit is a long-term ﬁnancing agreement while the revolving credit arrangement is
A short-term ﬁnancing agreement.

Question

Quizplus · Accepted Answer

The primary difference lies in the length of the time period covered by the loan agreement. A line of credit typically has a set end date by which the borrowed funds must be repaid or the line must be renewed, whereas a revolving credit arrangement allows the borrower to use the funds, repay them, and borrow again repeatedly over an indefinite period.

The Primary Difference Between a Line of Credit and a Revolving