To Compensate for the Uncertainty of Future Interest Rates and the Fact

question 7

Multiple Choice

To compensate for the uncertainty of future interest rates and the fact that the longer the term of aloan the higher the probability that the borrower will default, the lender typically

• A) reserves the right to change the terms of the loan at any time.
• B) charges a higher interest rate on long-term loans.
• C) reserves the right to demand immediate payment at any time.
• D) includes excessively restrictive debt provisions.

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