A measure of whether a borrower is able to pay back a loan in a timely manner.

• A. Investment
• B. Credit Worthiness
• C. Bonds
• D. Mutual Fund

Answer: (B)

The concept being tested is how lenders judge a borrower’s ability to repay debt. This is creditworthiness—the assessment of a borrower's ability and willingness to repay a loan. Lenders examine factors like income stability, employment history, existing debts, credit history and payment track record, and collateral when present. A borrower with strong creditworthiness is more likely to be approved and to receive favorable terms, including lower interest rates, because their risk of default is considered lower. Investments, bonds, and mutual funds are types of assets or securities, not measures of a borrower’s repayment ability.