A Borrower Who Has to Pay an Interest Rate of 8

question 75

Multiple Choice

A borrower who has to pay an interest rate of 8% rather than 6% due to risk spread will pay:

• A) $20 more in interest annually for every $100 borrowed.
• B) 33.3% higher interest in dollar terms.
• C) 2% in net interest.
• D) less interest in total over the life of the loan.

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Definitions:

M

A symbol often representing money supply in economic discussions, including various measures like M1, M2, and M3.

Q

Quantity, frequently used in economic equations and discussions to denote the amount of goods produced or consumed.

PQ

The product of price (P) and quantity (Q), often used in economics to calculate total revenue or expenditure.

P

Typically refers to "Price" in economic models, representing the monetary value assigned to a good or service in the market.