Which arrangement provides a borrower access to funds up to a predefined limit that can be drawn as needed?

Which arrangement provides a borrower access to funds up to a predefined limit that can be drawn as needed?

• A. Income
• B. Primary Market
• C. Checking Account
• D. Line Of Credit

Answer: (D)

A line of credit provides access to funds up to a predefined limit that can be drawn as needed. It works as flexible borrowing: you can take out up to the limit, repay, and borrow again, with interest charged only on the amount actually borrowed. This make it distinct from other options. Income is money you receive and does not itself provide borrowing access. A primary market is where new securities are issued, not a lending arrangement for ongoing access to funds. A checking account is a deposit-and-withdrawal account, not a credit facility with a revolving limit.

A line of credit provides access to funds up to a predefined limit that can be drawn as needed. It works as flexible borrowing: you can take out up to the limit, repay, and borrow again, with interest charged only on the amount actually borrowed. This make it distinct from other options. Income is money you receive and does not itself provide borrowing access. A primary market is where new securities are issued, not a lending arrangement for ongoing access to funds. A checking account is a deposit-and-withdrawal account, not a credit facility with a revolving limit.