Creditors Are Interested in Assessing a Borrower's Capacity and Character

question 25

Multiple Choice

Creditors are interested in assessing a borrower's capacity and character, as well as overall economic conditions when reviewing a loan application.Which of the following would make a bank more willing to lend funds?

• A)A small business faces deteriorating business conditions because of a recession in the overall economy.
• B)The owner of a small business has been personally bankrupt twice.
• C)A retail store has been diligent in making all of its payments on time and in full over the past five years.
• D)A large corporation missed an interest payment on one of its bond issues last month.

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Definitions:

Buyer/Lessee

An individual or entity that purchases or leases goods or property from another party under agreed-upon terms.

Common Law Rule

A principle or rule established in previous legal cases that is either binding on or persuasive for a court or other tribunal when deciding subsequent cases with similar issues or facts.

Perfect Tender Rule

A legal principle that requires the delivery of goods to be exactly as specified in the contract without any deviations or defects.

Conforming Goods

Products that meet the specifications and standards outlined in a purchase contract.