Paul Carter Is Applying for a Loan from a Bank

question 45

Multiple Choice

Paul Carter is applying for a loan from a bank.The bank is concerned because Paul is an airline pilot for United Airlines.The bank thinks that Paul may be laid off in the near future.Which one of the 5 Cs of credit is the bank concerned with?

• A)Character
• B)Capacity
• C)Capital
• D)Collateral
• E)Conditions

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Definitions:

Cash Dividends

Payments made by a company out of its profits to its shareholders, typically in cash.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financing activities.

Noncash Investing

Transactions involving non-monetary assets or financing that affect a company's investing activities but do not involve cash flows.