CFA Practice Question
When a firm needs guaranteed short-term funds available for a variety of purposes, the bank loan will likely be a ______.
B. revolving credit agreement
C. line of credit
D. banker's acceptance
A. compensating balance arrangement
B. revolving credit agreement
C. line of credit
D. banker's acceptance
Correct Answer: B
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.
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 |