Which of the following is not one of the "Five C's of Borrowing?"

Question

Which of the following is not one of the "Five C's of Borrowing?"

BlackTom AI · Accepted Answer

Question restatement: Which of the following is not one of the 'Five C's of Borrowing?

Option 1: certainty. This term is not among the traditional Five C's of borrowing. The classic five are character, capacity (or capital), collateral, and conditions, with capacity and capital sometimes treated as separate or combined concepts depending on the source. Therefore, certainty does not belong in the list of the Five C's.

Option 2: conditions. In many definitions, conditions refer to the borrower's economic environment, job stability, and other situational factors that lenders assess; this matches the concept of one of the Five C's (conditions). So this option aligns with the established framework.

Option 3: character. Character is one of the core Five C's, reflecting the borrower's trustworthiness and history of repaying debts. This is a correct member of the Five C's.

Option 4: collateral. Collateral is also a fundamental Five C, representing assets pledged to secure the loan. This is definitively part of the standard framework.

Why the remaining options are incorrect interpretations: 'Conditions' is indeed part of the Five C framework in many formulations, whereas 'Character' and 'Collateral' are explicitly listed. The only term among the options that does not appear in the conventional list is 'certainty', which is not used as a primary lending criterion in the Five C's.

In summary, the option that does not belong to the Five C's is certainty, while conditions, character, and collateral correspond to recognized components of the lending assessment framework.

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Which of the following is not one of the "Five C's of Borrowing?"

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GBUS*4330*W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser

Which of the following is not one of the "Five C's of Borrowing?"

View Explanation

Log in for full answers

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GBUS4330W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser