A revolving credit agreement typically involves a commitment fee and possibly higher interest rates compared to a line of credit, making it more expensive. However, it guarantees access to funds up to the agreed limit, reducing financial risk for the firm.

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In General

Question 91

Multiple Choice

In general,

A) a revolving credit agreement is more expensive but less risky to the firm than a line of credit.
B) a revolving credit agreement is more expensive and more risky to the firm than a line of credit.
C) a revolving credit agreement is less expensive and less risky to the firm than a line of credit.
D) a revolving credit agreement is less expensive but more risky to the firm than a line of credit.

Correct Answer: