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Why Would a Bank Require a Borrower to Have Collateral

Question 50

Multiple Choice

Why would a bank require a borrower to have collateral or a cosigner before agreeing to lend funds?


A) discourages some borrowers from asking for a loan
B) reduces risk associated with imperfect information
C) both act like a service contract in the goods market
D) complicates the process to discourage risking borrowers

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