Why is there a fee on the unused portion of a committed

Reference no: EM133377290

Question: When granting an Operating line of credit to a company the Financial institution (FI) will calculate a margin (proportion of the accounts receivables (A/R and/or inventory). A) Why doesn't the Financial Institution finance the full amount of the A/R and inventory? Provide two reasons, point form. B) Why is there a fee on the unused portion of a committed line of credit?

Reference no: EM133377290

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