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RUFIN AZISA HANNA
on Nov 07, 2024

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Considering the 5 C's of credit, what does collateral signify?

A) The customer's willingness to meet credit obligations.
B) The customer's ability to meet credit obligations out of operating cash flows.
C) The customer's financial reserves.
D) A pledged asset in the case of default.
E) General economic conditions in the customer's line of business.

5 C's of Credit

The 5 C's of Credit refer to the five key factors that lenders consider when evaluating a borrower's creditworthiness: character, capacity, capital, collateral, and conditions.

Collateral

Assets pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default.

Credit Obligations

The responsibilities to repay debt incurred through borrowing or credit agreements.

  • Gain an understanding of the five critical aspects of credit - Character, Capacity, Capital, Collateral, Conditions, and comprehend their relevance in credit analysis.
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Kayla McSweeneyNov 07, 2024
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