Differences in borrowing rates can generally be explained by the level of risk of the investment or loan and by the length of the investment or loan.

Question

Quizplus · Accepted Answer

This statement is generally true. Lenders will usually charge higher interest rates for loans with higher risk and/or longer terms, as they require more compensation for the potential for default or inflation. However, other factors may also come into play, such as market conditions, creditworthiness of the borrower, and competition among lenders.

Differences in Borrowing Rates Can Generally Be Explained by the Level