The risk of making a loan is
A) called "default risk" when taxes are not paid.
B) the risk that lender does not pay.
C) the risk that the borrower does not pay.
D) earning profits that are too high and cause higher taxes.

Question

Quizplus · Accepted Answer

The risk of making a loan refers to the possibility that the borrower may not pay back the loan. This is often referred to as default risk. Therefore, option C is the correct answer. Option A refers specifically to the failure to pay taxes, which is not necessarily related to loan risk. Option B is incorrect because it refers to a scenario where the lender does not pay, which is not the typical risk associated with making a loan. Option D is incorrect because it suggests that making too much profit can result in higher taxes, which is not directly related to loan risk.

The Risk of Making a Loan Is