Which term refers to the borrower's reputation for fair and ethical business practices?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Master Glencoe Entrepreneurship Finance Exam. Enhance your skills with detailed questions and comprehensive explanations. Prepare with confidence for success!

Multiple Choice

Which term refers to the borrower's reputation for fair and ethical business practices?

Explanation:
Character refers to the borrower's reputation for fair and ethical business practices. It captures honesty, integrity, and a history of meeting obligations. Lenders weigh character to gauge credit risk beyond numbers, because a borrower with a trustworthy track record is more likely to repay debts even if earnings fluctuate. This complements capacity, which looks at the ability to repay from cash flow, and collateral, which is the assets pledged as security. An IPO is unrelated to creditworthiness, so it doesn’t describe the borrower’s repayment ethics.

Character refers to the borrower's reputation for fair and ethical business practices. It captures honesty, integrity, and a history of meeting obligations. Lenders weigh character to gauge credit risk beyond numbers, because a borrower with a trustworthy track record is more likely to repay debts even if earnings fluctuate. This complements capacity, which looks at the ability to repay from cash flow, and collateral, which is the assets pledged as security. An IPO is unrelated to creditworthiness, so it doesn’t describe the borrower’s repayment ethics.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy