Question

Select the correct statement. Lenders:

Select one:

a. May suffer credit risk.

b. Have debt liabilities.

c. Are short debt.

d. Benefit from lower interest rates when they have better credit histories.

e. Are debtors.

Answer 1

Option -a is the correct option as when ever a lender gives money on credit they will suffer the risk that the borrower may default the money either principal or interest

Option - b is incorrect option as lender who give money to borrower on credit will have assets or advances given to customers which is an asset hence they seldom have debt liabilities.

Option -c is incorrect option as lenders donot have short debt as explained above they have assets

Option -d is incorrect option as lenders will not benefit form lower interest rates. The lower the interest rates the lower the income of the lenders.

Option E is incorrect option as lenders cannot become debtors infact they become either creditors i.e either current liabilty or non-current liabilities

Hence the most relevant and the best suitable option is OPTION A