Which of these forms of borrowing results in the lowest cost of credit?
William Jones is evaluating three possible means of borrowing $1 million for one month:
Drawing down on a line of credit at 7.2% with a ½% commitment fee on the full
amount with no compensating balances.
A banker’s acceptance at 7.1%, an all-inclusive rate.
Commercial paper at 6.9% with a dealer’s commission of 1
/4% and a backup line cost
of 1
/3%, both of these would be assessed on the $1 million of commercial paper issued.
A. Line of credit.
B. Banker’s acceptance.
C. Commercial paper
Ans: B. Banker’s acceptance.
You might also like to view...
Each population member has a known chance of being included when a probability sampling procedure is used
Indicate whether the statement is true or false
Why did the Obama administration join other democratic governments in deploying "shadow" Internet and mobile phone systems against other governments?
A) to stop them from pirating copyrighted material from the United States B) to test new technologies for the intelligence community C) to undermine repressive government attempts to censor dissidents D) to warn them that their behavior would not be tolerated