Which of the Following Suggests That Higher Interest Rates Are

question 107

Multiple Choice

Which of the following suggests that higher interest rates are charged to high risk borrowers?

• A)Direct relationship principle
• B)Compensating balance concept
• C)Risk/return tradeoff
• D)Cost-benefit analysis

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Definitions:

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the total amount loaned.

Asset

A resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefits.

Geometric Series

A sequence of numbers where each term after the first is found by multiplying the previous one by a fixed, non-zero number called the ratio.

Infinite

Describing a quantity without end or limit, often used in mathematics or to describe concepts that cannot be quantified.