Most business loans are priced as prime-plus, where the plus reflects default risk and term risk.

Name: Most business loans are priced as prime-plus, where the plus reflects default risk and term risk.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Most business loans are priced using a prime-plus model, where the "plus" component accounts for additional risks such as the likelihood of default (default risk) and the duration of the loan (term risk), adjusting the interest rate accordingly to compensate for these risks.

Most Business Loans Are Priced as Prime-Plus, Where the Plus