A borrower who has to pay an interest rate of 8% rather than 6% due to risk spread will:
A) Pay $20 more in interest annually for every $100 borrowed
B) Pay 33.3% higher interest in dollar terms
C) Pay 2% in net interest
D) Pay less interest in total over the life of the loan

Question

Quizplus · Accepted Answer

The interest rate increase from 6% to 8% represents a 33.3% increase in the interest rate (calculated as (8-6)/6 * 100%).

A Borrower Who Has to Pay an Interest Rate of 8