Question

question 12
when evaluating a loan proposal, lenders are most concerned with the businesss collateral, which is:

the total operating expenses of the business.

assets pledged by the borrower to secure the loan.

the potential return on investment (roi).

the expected net income for the next fiscal year.

Explanation:

To solve this, we analyze each option:

• "The total operating expenses of the business" refers to costs, not collateral.
• "Assets pledged by the borrower to secure the loan" matches the definition of collateral (assets used to secure a loan, so lenders can claim them if the borrower defaults).
• "The potential return on investment (ROI)" relates to investment profitability, not collateral.
• "The expected net income for the next fiscal year" is about future earnings, not collateral.

Answer:

B. Assets pledged by the borrower to secure the loan.