Question

A firm negotiates a(n) _________ with its bank. This arrangement gives the firm access to a specified amount of unsecured short-term funds, provided the bank has the funds available.

A. line of credit

B. reserve account

C. capital drawing agreement

D. asset drawing account

Answer 1

The correct answer is letter "A": line of credit.

Step-by-step explanation:

A line of credit is an arrangement where a bank offers a maximum loan amount that the borrower can drop on at any time. The borrower, which can be an individual, business or government entity has the flexibility to take out as much as they want up to the maximum amount always that the bank counts with that amount.