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WAEC Commerce 1995 Question 32

Question 32

Banking

Which of the following is not a feature of good banking security? The

  1. A.asset must be easily converted into cash
  2. B.value of the asset must be easily ascertained
  3. C.ownership of the asset must not be in doubt
  4. D.value of the asset should be stable
  5. E.value of the asset must be less than the amount loaned
Show the answer and explanation

Answer: E (value of the asset must be less than the amount loaned)

Explanation

A good security must be worth more than the loan, not less, so the bank can recover its money.