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

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The primary difference between a line of credit and a revolving credit arrangement is the length of the time period covered by the loan agreement. A line of credit is typically a short-term financing agreement that may be renewed on an annual basis, while a revolving credit arrangement generally has a longer time period, usually several years. The type of collateral used to secure the loan and whether it is secured or unsecured can vary for both types of credit arrangements.

The Primary Difference Between a Line of Credit and a Revolving