Which of the following statements concerning lines of credit is untrue?

Multiple Choice

Banks sometimes require the company to maintain a compensating balance on deposit with the bank $($say $5\%)$ as part of the line of credit agreement.

A line of credit is an agreement that permits a company to borrow up to a prearranged limit without having to follow formal loan procedures and paperwork.

Most short$-$term bank loans are arranged under an existing line of credit.

A noncommitted line of credit is a formal agreement that usually requires the firm to pay a commitment fee to the bank.