Which of the following will lead to a higher interest rate on a loan?
A) lower inflation
B) lower opportunity cost
C) increased perceived risk of default
D) reduced likelihood of borrower not paying the loan

Question

Quizplus · Accepted Answer

Increased perceived risk of default will lead to a higher interest rate on a loan. When lenders perceive a borrower as a high risk for default, they will demand a higher interest rate to compensate for the increase in risk. Factors that can increase the perceived risk of default include a high debt-to-income ratio, poor credit history, or lack of collateral.

Which of the Following Will Lead to a Higher Interest