A ______ is an informal arrangement between a bank and a business that allows the firm to periodically borrow up to a pre-specified limit with limited paperwork.

A. non-committed line of credit
B. committed line of credit
C. long-term loan commitment
D. field warehouse financing arrangement

Correct Answer: A

A committed line of credit is a formal legal arrangement. A long-term loan commitment does not relate to periodic short-term borrowing. Field warehouse financing is a very formal legal arrangement that relates to inventory financing.