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explanation of A.
C. A is correct but R is wrong.
D. A is wrong but R is correct.
5 Fill in the blanks choosing the correct option from the brackets. 1 47
While taking a loan, borrowers look for easy terms of credit.
This means ___________ (low/high) interest rate, ________
(easy/tough) conditions for repayment, ___________
(less/more) collateral and documentation requirement.
6 Beside banks, the other major source of cheap credit in rural 1 47
areas are the ____________.
(a) Land lords
(b) Money lenders
(c) Cooperative societies
(d) Government
7 Tick the correct Answer 1 47
Arun is one of the few people in Sonpur to take a bank loan
because
(a) Other people in the village prefer to borrow from the
money lenders.
(b) Banks demand collateral which everyone cannot
provide.
(c) Interest rate on bank loans is same as the interest rate
charged by the traders.

QUESTIONS

SR. QUESTION MARKS PAGE
NO. NO.
1 Q- What is collateral? 1 44
A- Collateral is an asset that the borrower owns (such as land,
building, vehicle, livestock’s, deposits with banks) and uses this as a
guarantee to a lender until the loan is repaid.
2 Q- Why do lenders ask for collateral while lending? 1 44
A- If the borrower fails to repay the loan, the lender has the right to
sell the asset or collateral to obtain payment. Property such as land
titles, deposits with banks, livestock are some common examples of
collateral used for borrowing.
3 Q- What do you mean by ‘Terms of Credit’? 1 45
A- Interest rate, collateral, documentation requirement and the mode