The basic strength of the below-prime market pricing model is that there are narrow margins or markups on loans.

Question

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The below-prime market pricing model is based on providing loans to borrowers with lower credit scores or poor credit histories at a relatively higher interest rate than prime borrowers. However, the model follows narrow margins or markups on loans to mitigate the risk of default and cover operational costs, making it a cost-effective way for lenders to provide loans to subprime borrowers. Therefore, the statement is true.

The Basic Strength of the Below-Prime Market Pricing Model Is