A revolving credit agreement is a formal line of credit. The firm must generally pay a fee on the unused balance of the committed funds to compensate the bank for the commitment to extend those funds. a. True b. False

Question

Mireya Solomon

Business

21 February, 02:45

A revolving credit agreement is a formal line of credit. The firm must generally pay a fee on the unused balance of the committed funds to compensate the bank for the commitment to extend those funds. a. True b. False

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Answers (1)

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Gia Soto · Answer 1

a. True

Explanation:

A revolving credit agreement is a line of credit, that is, a default limit that a firm can use to borrow money as much as possible until this limit is reached. The firm will have to pay the bank for a commitment to lend or extend such funds. The bank will also put some factors about the firm's ability to pay into consideration before revolving credit can be used.