Banks Require Collateral for Loans in Order to

question 80

Multiple Choice

Banks require collateral for loans in order to

• A)ensure that borrowers have significant amounts of their own funds invested in their businesses.
• B)charge higher interest rates on loans.
• C)reduce their tax liability on the interest they collect on loans.
• D)reduce the total amount they are obliged to lend to any one borrower.

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Definitions:

Persian Gulf

A shallow arm of the Arabian Sea between Iran and the Arabian peninsula, known for its extensive oil reserves.

Island Arcs

Chains of volcanic islands that form along subduction zones where one oceanic plate subducts beneath another.

Ocean-ocean Convergent

A tectonic boundary where two oceanic plates collide, typically resulting in the subduction of one plate beneath the other and often forming volcanic island arcs.

Tectonic Setting

The environmental context related to the structure and movement of the Earth’s crust, including plate boundaries and associated geological activity.