The interest rate charged on secured short-term loans to a corporation is generally higher than that charged on unsecured short-term loans because
A) secured loans are less risky than unsecured loans.
B) the risk of default is lower on secured loans.
C) it is costly to negotiate and administer secured loans.
D) lenders of secured loans must pay more for their funds.

Question

Quizplus · Accepted Answer

Secured loans involve additional costs related to the negotiation and administration of the collateral, which can lead to higher interest rates compared to unsecured loans.

The Interest Rate Charged on Secured Short-Term Loans to a Corporation