Commercial banks lend unsecured short-term funds in the following three basic ways.

Question

Quizplus · Accepted Answer

Single-payment notes are a type of short-term loan that must be repaid in a lump-sum payment at the end of a specified period, while lines of credit and revolving credit agreements are forms of short-term loans that provide borrowers with the flexibility to borrow as needed up to a predetermined credit limit. Therefore, option B accurately lists three basic ways for commercial banks to lend unsecured short-term funds. Option A is incorrect because it lists commercial paper, which is a type of short-term debt instrument issued by corporations, not commercial banks. Option C is incorrect because revolving credit agreements are listed twice, and option D is incorrect because it does not include single-payment notes as a lending option.

Commercial Banks Lend Unsecured Short-Term Funds in the Following Three