The more risky the project undertaken by a ﬁrm, the lower the interest rate on the loan offered to ﬁnance the project.

Name: The more risky the project undertaken by a ﬁrm, the lower the interest rate on the loan offered to ﬁnance the project.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The statement is false. The more risky a project, the higher the interest rate on the loan typically offered to finance the project. Lenders require a higher rate of return to compensate for the additional risk they are taking on.

The More Risky the Project Undertaken by a ﬁRm, the Lower