Different Borrowers Have Different Risks of Bankruptcy, and Bankruptcy Is

question 23

True/False

Different borrowers have different risks of bankruptcy, and bankruptcy is costly to lenders.Therefore, lenders charge higher rates to borrowers judged to be more at risk of going bankrupt.

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Definitions:

Observational Learning

The process of acquiring new behaviors or knowledge by observing the actions of others and the consequences of those actions.

Classical Conditioning

A teaching mechanism involving the link between a stimulus found in the environment and one that naturally exists.

Positive Reinforcer

A stimulus which, when presented after a behavior, increases the likelihood of that behavior being repeated.

Conditioned Stimulus

A conditioned stimulus is a previously neutral stimulus that, after becoming associated with an unconditioned stimulus, elicits a conditioned response.