Which of the following would be LEAST likely to lower the interest rate that a bank offers a borrower?
A)The number of borrowers seeking funds is low.
B)The expected inflation rate is expected to be low.
C)The borrower is judged to have a low degree of risk.
D)The investment will be for a long period of time.

Question

Quizplus · Accepted Answer

A long investment period typically increases the risk for the borrower defaulting on the loan, which would increase the interest rate to compensate for the risk. Therefore, a long investment period is least likely to lower the interest rate. A, B, and C all indicate factors that could lower the interest rate by decreasing the overall risk to the lender.

Which of the Following Would Be LEAST Likely to Lower