A/an __________ is a document that guarantees that a bank will lend an issuer of commercial paper the funds to pay off creditors on the due date if the issuer of the commercial paper cannot.
A)standby line of credit
B)junk bond
C)unused credit line
D)derivative

Question

Quizplus · Accepted Answer

A standby line of credit is a financial instrument that provides a guarantee to a bank that they will lend funds to an issuer of commercial paper if they are unable to pay off creditors on the due date. This helps reassure investors and makes it easier for issuers to sell commercial paper in the short-term market. Junk bonds are high-risk, high-yield bonds that are not related to standby lines of credit. Unused credit lines and derivatives may be related to other types of financing but are not specifically associated with standby lines of credit.

A/an __________ Is a Document That Guarantees That a Bank