Chuck Spencer wants to borrow money for six years to purchase a new car.He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent.By choosing the variable rate loan,Chuck is reducing the lender's risk by:
A) sharing the interest rate risk.
B) increasing his monthly payments.
C) taking a higher stake in the asset he is purchasing.
D) repaying the loan over a faster period of time.
E) pledging collateral.
Correct Answer:
Verified
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