Question

TUI

Answer 1

Answer:

The correct answer is A)There is a greater risk that a longer-term loan will not be repaid.

Explanation:

Longer-term loans usually have higher interest payments than short-term longs, the reason is, as stated in the answer, that the longer the loan, the higher the risk that the borrower will not be able to repay the complete loan, interest included.

For example, a 10 year mortgage is cheaper than a 40 year mortgage because a lot more things can happen in 10 years than in 40 years that might affect the loan. In the span of 40 years the borrower could even die.