Considering the 5 C's of Credit, What Does Capacity Signify

question 344

Multiple Choice

Considering the 5 C's of credit, what does capacity 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.

---

Definitions:

Foreign Exchange Market

The global marketplace for exchanging national currencies against one another, driven by the need for currency conversion in trade and investment.

Depreciate

The process of allocating the cost of a tangible asset over its useful life, reflecting a decrease in its value over time.

US Dollars

The currency of the United States of America, widely used as a standard of exchange in international markets.

Forward Market

A market where individuals can engage in agreements to purchase or sell assets at a predetermined date and price in the future.