The ______________________ Approach to Pricing a Loan Starts with a Base

question 97

Short Answer

The ______________________ approach to pricing a loan starts with a base interest rate and adds a risk premium for default and for time to maturity.

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Definitions:

Conversion Formula

A mathematical equation used to convert a quantity expressed in one set of units to another set of units.

Milligrams

A unit of mass in the metric system equal to one-thousandth of a gram.

Grams

A unit of mass in the metric system, used to measure small quantities of substances.

Dimensional-Analysis

A method in mathematics and physics that uses units of measurement to help solve problems involving conversion or comparison of different scales.