Asked by Morris Mwendwa on Jun 28, 2024
Verified
When reviewing loan applications, Jessica, a loan officer at A+ credit union, always examines the amount of cash and marketable securities that applicants have on hand. She reviews historical, current, and projected cash flows of a business to gauge whether applicants are able to repay the loan. These activities best describe which of the five "C's" of credit?
A) Capacity
B) Capital
C) Collateral
D) Character
Cash Flows
The total amount of money being transferred into and out of a business, affecting the organization's liquidity, financial health, and operational capabilities.
Marketable Securities
Financial assets that can be quickly converted into cash at a known price.
Capacity
The maximum amount that something can contain or produce.
- Identify the five "C's" of credit and their significance in the loan application process.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
A
Explanation :
Jessica is assessing the applicants' capacity, which refers to their ability to repay the loan by examining their cash flows and liquidity.
Learning Objectives
- Identify the five "C's" of credit and their significance in the loan application process.