Which of the Following Statements Is True

question 27

Multiple Choice

Which of the following statements is true?

• A)A major corporation would tend to pay a higher interest rate for a $10,000 loan than a single parent working for a fast food restaurant.
• B)The more risky the loan, the higher the interest rate charged, ceteris paribus.
• C)The less risky the loan, the higher the interest rate charged, ceteris paribus.
• D)The duration (length) of a loan is unrelated to the interest rate charged for the loan.
• E)c and d

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Definitions:

Insurable Interest

A principle that requires an individual to have a legitimate financial or emotional stake in the preservation of the subject of insurance to obtain a policy.

Insurance Policy

A contract issued by an insurer to an insured, detailing the terms under which the insurer agrees to financially protect the insured against specific risks in exchange for premiums.

Indemnified

Protected against liability, loss, or damage, typically through a legal agreement where one party agrees to compensate another for any financial harm that arises.

Wagering Purposes

refers to the use of funds or resources for betting or gambling activities.