Question

The interest rate charged on bank loans must be sufficient to cover all the following except:...

The interest rate charged on bank loans must be sufficient to cover all the following except:

Multiple Choice

a risk premium when loans are personally guaranteed by the borrower.

the lender’s cost of borrowing funds.

a premium for exposure to default risk.

the costs of administering, monitoring, and servicing the loan.

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Answer #1

solution :


The interest rate charged on bank loans must be sufficient to cover all the following except:

a.a risk premium when loans are personally guaranteed by the borrower.


Loan fee charged by banks will be adequate to keep up it's working cost, cost of acquiring, and the premium to presentation to default chance It would not do the trick as a hazard premium if credits are by and by ensured by the borrower, as for this situation if the business is wasteful to reimburse the advance, the borrower would actually reimburse it.


option A

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