Lenders recognize that by having an interest in collateral they can reduce losses if the borrowing firm defaults, ________.
A) and the presence of collateral reduces the risk of default
B) but the presence of collateral has no impact on the risk of default
C) therefore lenders prefer to lend to customers from whom they are able to demand collateral
D) therefore lenders will impose a higher interest rate on unsecured long-term borrowing

Question

Quizplus · Accepted Answer

The Answer of Lenders recognize that by having an interest in collateral they can reduce losses if the borrowing firm defaults, ________.
A) and the presence of collateral reduces the risk of default
B) but the presence of collateral has no impact on the risk of default
C) therefore lenders prefer to lend to customers from whom they are able to demand collateral
D) therefore lenders will impose a higher interest rate on unsecured long-term borrowing

Lenders Recognize That by Having an Interest in Collateral They