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People Who Give Guarantees Are Vulnerable to the Actions of the Principal

question 17

Essay

People who give guarantees are vulnerable to the actions of the principal debtor and the creditor.Explain how the law seeks to protect guarantors with reference to examples of the ways in which the guarantor may be put at risk.


Definitions:

Risk-free Rate

The theoretical rate of return of an investment with zero risk, typically associated with government bonds.

Swap Market

A marketplace where parties exchange financial instruments, such as interest rates or currencies.

Derivatives Market

A financial market for securities whose value derives from the value of other underlying financial assets, such as stocks, bonds, or commodities.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

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