Each of the following is a reason why lenders might add a risk premium to the interest rate they charge for a loan except
A) lenders need to be compensated if the loan is being sought to finance a risky project.
B) the borrower has a history of not repaying loans.
C) the investment project for which the borrower is seeking a loan may not prove to be profitable.
D) lenders always charge high interest rates.

Question

Quizplus · Accepted Answer

Lenders add a risk premium to the interest rate based on the perceived risk of the loan, such as the borrower's credit history or the project's profitability, not simply to always charge high rates.

Each of the Following Is a Reason Why Lenders Might