CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

When a firm needs guaranteed short-term funds available for a variety of purposes, the bank loan will likely be a ______.

A. compensating balance arrangement
B. revolving credit agreement
C. line of credit
D. banker's acceptance
Correct Answer: B

A: These are funds that are required to be maintained in an account with the bank but do not directly represent a loan.
C: This is appropriate if the firm needs the funds for multiple purposes but it is not guaranteed (like a revolving credit agreement).
D: This is mainly used for foreign trade.

User Contributed Comments 2

User Comment
johntan1979 Information overdose xp
ibrahim18 the principle here is guaranteed. Revolving credit agreement is guaranteed. Others are not
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