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The interest charged on loans is determined by the __________?

Economics
JAMB 2016

The interest charged on loans is determined by the __________?

  • A. Exchange rate
  • B. Fiscal policy
  • C. Risk associated with the loan
  • D. Rate of production in the country
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Correct Answer: Option C
Explanation

They make money on the interest they charge on loans because that interest is higher than the interest they pay on depositors' accounts. The interest rate a bank charges its borrowers depends on both the number of people who want to borrow and the amount of money the bank has available to lend.


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