How is a revolving credit agreement different from a line of credit?

QUESTION

How is a revolving credit agreement different from a line of credit?

A) Only in a revolving credit agreement does the bank guarantee the loan and is the bank obligated to loan funds up to the credit limit.
B) Only in a revolving credit agreement does the bank specify how much it is willing to lend the borrower.
C) Only in a revolving credit agreement does the bank specify a period of time for the loan.
D) Only in a revolving credit agreement does the borrower provide some form of collateral.
E) Only in a revolving credit agreement is the borrower asked to produce a credit report.

ANSWER

Answer: A
Explanation: A) A revolving credit agreement resembles a line of credit, except that the bank guarantees the loan and is obligated to loan funds up to the credit limit.