Which of the Following Reasons for Considering Long-Term Loans Inherently

question 20

Multiple Choice

Which of the following reasons for considering long-term loans inherently more risky than short-term loans is most accurate?

• A)The loan values are very sensitive to changes in market interest rates.
• B)The penalties for closing out a long-term loan early make them unattractive to many investors.
• C)There is a greater chance that a borrower will default in a longer timeframe.
• D)Long-term loans typically have ongoing costs that accumulate over the life of the loan.

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Definitions:

Hospitalized

The state of being admitted to a hospital for treatment that cannot be provided on an outpatient basis.

Pneumonia

An infection that inflames the air sacs in one or both lungs, which may fill with fluid or pus, leading to breathing difficulties.

Methodical

Characterized by a systematic, orderly approach often employed in processes or investigations to achieve specific objectives.

Assessment Skills

The ability to evaluate or estimate the nature, ability, or quality of something, often related to skills or competencies.