Multiple Choice QuestionAn agreement by which a financial institution promises to lend a business a predetermined sum on demand is called ______.Multiple choice question.a line of credita trade creditcollateralequity financing
Question
Multiple Choice QuestionAn agreement by which a financial institution promises to lend a business a predetermined sum on demand is called ______.Multiple choice question.a line of credita trade creditcollateralequity financing
Solution
The correct answer is a. a line of credit. This is a type of financing that allows a business to draw up to a certain amount of money. The business can use as much of the line of credit as needed, provided the total amount does not exceed the maximum limit set in the agreement. Unlike a traditional loan, interest is only charged on the amount of money actually used.
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