The credit applicant's ________ is its ability to repay the requested credit.
A) character
B) capacity
C) capital
D) collateral

Question

Quizplus · Accepted Answer

Capacity refers to the borrower's ability to repay the requested credit, i.e., the borrower's financial stability and the ability to generate sufficient cash flows to service the loan. Character refers to the borrower's willingness to repay the loan, capital denotes the borrower's net worth, and collateral refers to the assets pledged to secure the loan.

The Credit Applicant's ________ Is Its Ability to Repay the Requested