Which of the following best describes a bank loan arrangement where a bank agrees to lend a firm any amount up to a stated maximum in an informal agreement which does not legally bind the bank to provide the funds?

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An uncommitted line of credit is a type of bank loan arrangement where a bank agrees to lend a firm any amount up to a stated maximum in an informal agreement which does not legally bind the bank to provide the funds. On the other hand, a committed line of credit is a formal agreement where a bank commits to lend a firm up to a specified amount over a set period, usually up to a year.

Which of the Following Best Describes a Bank Loan Arrangement