The basic weakness of the cost-plus loan pricing method is that it gives little regard to the competition from other lenders while setting the loan price.

Question

Quizplus · Accepted Answer

The cost-plus loan pricing method mainly focuses on recovering the cost of capital and adding a markup for profit, without taking into consideration the competition from other lenders. This can result in pricing loans higher than what the market can bear, leading to potential loss of customers to competitors. Hence, the statement is true.

The Basic Weakness of the Cost-Plus Loan Pricing Method Is