Question 14 of 28

History

1 answer:

natita [175]3 years ago

7 0

Answer: D. There is a greater risk that a 10-year loan will not be repaid.

Explanation:

Loans with a greater time period will usually attract a higher charge because more could go wrong in that longer time period than in the shorter time. Events might occur that would impart the capability of the loanee to pay back the loan so the loaner would charge a higher amount to cater for this risk.

The higher charge on longer term instruments is known as the maturity premium and this premium increases the longer the life of the loan instrument.

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