For One Person to Be Willing to Lend Money to Another

question 61

Multiple Choice

For one person to be willing to lend money to another person,the interest rate must be high enough to compensate the lender for

• A) the risk of deflation and bearing the risk of default.
• B) the time value of money and bearing the risk of default.
• C) the opportunity cost of risk and the principal.
• D) the certainty of default and the certainty of inflation.

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Definitions:

College Education

An advanced level of education beyond high school, usually provided by colleges or universities, that typically results in a degree or certification.

Cognitive Flexibility

The cognitive skill to toggle between considering two distinct ideas or to contemplate several ideas at the same time.

Childhood Assumptions

Beliefs or ideas developed during childhood that individuals often accept as true without questioning them as they grow older.

Postformal Thinking

A stage of cognitive development in adulthood characterized by the ability to deal with complex situations and contradictory elements in a reflective and relativistic manner.