11-59 Which of the following factors may affect the promised return an FI receives on a loan?

Question

Quizplus · Accepted Answer

All of the above factors can affect the promised return an FI receives on a loan. The collateral backing of the loan reduces the credit risk and helps secure the loan, thereby affecting the return. The fees relating to the loan, such as origination fees or prepayment penalties, can affect the overall return earned by the FI on the loan. The interest rate on the loan directly affects the return, and the credit risk premium reflects the increased return required by the lender to compensate for the added risk of default. Therefore, all of these factors should be considered when determining the promised return on a loan.

11-59 Which of the Following Factors May Affect the Promised