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A Key Difference Between a Line of Credit and a Revolving

Question 158

Multiple Choice

A key difference between a line of credit and a revolving credit agreement is that under a line of credit:


A) the bank agrees to make funds available as long as the borrower's credit rating doesn't deteriorate, while in a revolving credit agreement, the bank guarantees that the funds will be available.
B) the funds are available for up to a year, while under a revolving credit agreement the funds are available for no more than 90 days.
C) the interest rate on the borrowed funds is stated in advance, while in a revolving credit agreement the interest rate is allowed to "float" based on agreed upon criteria.
D) the borrower must secure the funds by pledging collateral, but with a revolving credit agreement, the bank agrees to make additional funds available as long as the principal and interest are paid.

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