The Administration Costs of a Loan as a Proportion of the Total

question 103

Multiple Choice

The administration costs of a loan as a proportion of the total cost of the loan typically

• A)decrease as the size of the loan increases.Therefore, the larger the loan, other things constant, the lower the interest rate
• B)decrease as the size of the loan increases.Therefore, the larger the loan, other things constant, the higher the interest rate
• C)increase as the size of the loan increases.Therefore, the larger the loan, other things constant, the lower the interest rate
• D)increase as the size of the loan increases.Therefore, the larger the loan, other things constant, the higher the interest rate
• E)increase as the size of the loan increases, but this has no impact on the interest rates charged for large loans compared to small loans

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Definitions:

Long-Term Growth

The process of expanding or improving a business, investment, or economic endeavor over a considerable period, aiming for sustained and stable progress.

Functional Expenses

In non-profit accounting, these are the expenses directly related to the organization's programmatic, fundraising, and administrative activities.

Expense Allocated

The method by which costs are assigned to different departments, projects, or activities within an organization.

Financial Position

The status of the assets, liabilities, and equity of an organization at a given point in time, as reflected in its financial statements.