3 C’s of Credit
3 C's of credit are:
- All the above (Character, Capital, Capacity) — Correct Answer
- Character only
- Capital only
- Capacity only
Explanation:
Correct Answer: Character, Capital, Capacity
The 3 C's of Credit are: Character, Capital, and Capacity. These criteria help lenders determine whether to extend credit to a borrower.
3 C's Explained
- Character: The borrower's honesty, integrity, and track record of repaying previous debts — 'willingness to pay'.
- Capital: The net worth or assets owned by the borrower — provides security to the lender.
- Capacity: The borrower's current cash flow and income-generating ability to service the debt — 'ability to pay'.
Comparison: 3 R's vs 3 C's of Credit
- 3 R's: Return, Repayment capacity, Risk bearing — focused on investment viability
- 3 C's: Character, Capital, Capacity — focused on borrower's creditworthiness
📚 About this Topic — Animal Refresher
This multiple choice question is from Animal Refresher, Veterinary Extension Education. It has 4 options with a detailed explanation of the correct answer. Practice more MCQs from Animal Refresher to strengthen your preparation.
