When obtaining a loan, the risk premium paid above LIBOR depends on the:

Question

Quizplus · Accepted Answer

The risk premium paid above LIBOR depends on the credit risk of the borrower. This is because lenders use credit risk to determine the likelihood of default, which affects the risk premium. Factors that contribute to credit risk include the borrower's credit score, payment history, financial stability, and industry trends. The risk-free interest rate and stock prices may impact the overall cost of borrowing but do not directly affect the risk premium. The lender's stock price also has no direct impact on the risk premium paid above LIBOR.

When Obtaining a Loan, the Risk Premium Paid Above LIBOR