Why Do Lenders Generally Want a Higher Interest Rate When

question 48

Multiple Choice

Why do lenders generally want a higher interest rate when loans stretch over a longer period?

• A) The opportunity cost increases over time.
• B) There's more uncertainty about potential future investment opportunities.
• C) They want to be compensated for the inability to get their money back quickly.
• D) All of these are true.

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Definitions:

Mental Set

A mental framework or predisposition to approach problems in a specific way, often hindering the ability to find alternative solutions.

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A coin representing half a dollar in U.S. currency, often collected for its numismatic value.

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A psychological framework or mindset that predisposes an individual's thoughts, behavior, or perception, often making it difficult to think in new or creative ways.