Which of the following is false?

Question

Quizplus · Accepted Answer

Back-up lines of credit and letters of credit are both forms of credit enhancement, but they serve slightly different purposes and their strength as a credit enhancement tool can depend on the specific circumstances and the way they are structured. Saying one is categorically stronger than the other is misleading. Letters of credit can provide a direct and explicit guarantee of payment, which can be seen as a strong form of credit enhancement. Back-up lines of credit provide a borrower with access to funds if needed, which indirectly enhances credit by ensuring liquidity, but does not guarantee payment to bondholders or commercial paper holders in the same direct manner as a letter of credit.

Which of the Following Is False