BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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TRUE
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FALSE
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Detailed explanation-1: -A character loan is a type of unsecured loan that is made because of the lender’s faith in the borrower’s reputation and credit. Borrowers are typically able to obtain only small loans by this method.
Detailed explanation-2: -Lenders have certain terms that an asset must meet before it can be used as collateral for a loan or line of credit. For an asset to qualify, it has to be of high value, low depreciation rate or high appreciation rate, and easily convertible into cash.
Detailed explanation-3: -Unsecured loans are loans that are not backed by a valuable asset, such as gold or real estate. These loans carry a higher interest rate since they pose a greater risk to the lender.
Detailed explanation-4: -Character is the most important and therefore the first consideration in making a loan decision. It is also the most difficult, as it is subjective. Determining one’s character is to determine the borrower’s willingness to repay the loan.