7-16 In the case where a borrower defaults on a loan,the FI may lose only a portion of the interest payments and a portion of the principal that was loaned.

Question

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When a borrower defaults, the financial institution (FI) may recover some of the principal and interest through collateral or other means, but often not the full amount, leading to partial losses.

7-16 in the Case Where a Borrower Defaults on a Loan,the