Which of the following statements is true?

Question

Quizplus · Accepted Answer

The risk cost of doing business in a high-crime area is higher, and lenders charge higher interest rates to compensate for this additional risk. The other statements are incorrect. A statement is incorrect because corporations have better creditworthiness and are perceived as less risky, so they receive lower interest rates. B is incorrect because expectations of higher inflation would drive up interest rates as lenders seek compensation for the decrease in purchasing power of the money they lend. C is incorrect because unstable countries typically have higher interest rates due to the increased risk. E is incorrect because lower tax rates generally result in lower interest rates because businesses have more capital to invest, which drives down the cost of borrowing.

Which of the Following Statements Is True