Exchange rate
Fiscal policy
Risk associated with the loan
Rate of production in the country
Explanation
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Discussions (9)
Do you all even know what exchange rate is?? How will It be A? Exchange rate is the rate at which one currency is echanged for another currency... How does it relate to loan? Are you converting your money to dollar or pounds?
Altbough, Option A, B and D can have an impact on the loan, but the impact is indirect and it is elusive
The answer is the risk associated to the loan risk such as the creditworthiness of the borrower, amount of the loan, current market interest rate, purpose of the loan etc.
the answer is C
Chatgpt
Yes, typically the interest charged on loans is determined, at least in part, by the risk associated with the loan. Lenders assess various factors such as the borrower's creditworthiness, income stability, collateral, and the purpose of the loan to determine the level of risk. Higher-risk borrowers usually receive loans with higher interest rates to compensate lenders for the increased risk of default.
D is correct because the more productive the economy is the higher the interest.
interest charged on loan in a developed country is higher because of the advanced productivity which is caused by advanced technology .
Bank will not toy with depositors money when there is high risk.
fiscal policy, its not measures that CBN takes during inflation they do take on deflation.
