To Compensate for the Uncertainty of Future Interest Rates and the Greater

question 83

Multiple Choice

To compensate for the uncertainty of future interest rates and the greater default risk for longer term loans,the lender generally:

• A) charges a higher rate of interest on long-term loans.
• B) includes a very high number of restrictive debt provisions.
• C) is entitled to change the terms of the loan at any time.
• D) is entitled to demand repayment of the loan at any time.

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Definitions:

Conservative

An investment strategy or approach that prioritizes preservation of capital and moderate growth, typically with lower risk.

Financial Plan

A comprehensive evaluation of an individual's or organization's current and future financial state by using current known variables.

Stretch Goals

Highly ambitious or challenging targets set beyond current expectations and capabilities to push performance and drive significant achievements.

Aggressive Optimism

A mindset or attitude where an individual or organization has high expectations and confidence, often pushing boundaries and taking bold actions.