General Studies · Term Loan Appraisal
Given below are two statements, one labeled as Assertion and the other as Reason. Analyze them and choose the correct option. Assertion: In a Term Loan appraisal, a high Debt Service Coverage Ratio (DSCR) is always a positive indicator of the borrower's credit strength and should lead to an immediate approval of the credit facility. Reason: The DSCR measures the margin of safety available to the bank for the repayment of principal and interest, and a ratio significantly above 2.0 indicates that the project can withstand substantial fluctuations in its operating cash flows.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both Assertion and Reason are true and the Reason is the correct explanation of the Assertion.
- 2Both Assertion and Reason are true but the Reason is not the correct explanation of the Assertion.
- 3The Assertion is true but the Reason is false.
- 4The Assertion is false but the Reason is true.✓
Correct answer
The Assertion is false but the Reason is true.
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