To compensate for the uncertainty of future interest rates and the fact that the longer the term of a loan the higher the probability that the borrower will default, the lender typically ________.

Question

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Charging a higher interest rate on long-term loans allows the lender to compensate for the uncertainty of future interest rates and the increased likelihood of default over a longer period of time. This helps to mitigate their risk and ensure profitability. Options B, C, and D are unlikely as they would be overly restrictive and potentially drive borrowers away.

To Compensate for the Uncertainty of Future Interest Rates and the Fact