Asked by jessica portnoy on Jun 09, 2024
Verified
If there were no usury law the interest rate would be _________%.
A) 6
B) 12
C) 18
D) 24
E) 30
Usury Law
Legislation that sets maximum interest rates that can be charged on loans, designed to protect consumers from excessively high rates.
Interest Rate
The Interest Rate is the percentage at which interest is paid by borrowers for the use of money they borrow from a lender, commonly expressed as an annual percentage.
- Detail the relationship between usury law provisions and their influence on the structure of interest rates, considering the perspective of both borrowers and lenders.
Verified Answer
CS
Campus SafetyJun 10, 2024
Final Answer :
D
Explanation :
Without usury laws, lenders could charge higher interest rates to borrowers, which could lead to excessive debt and financial instability. Historically, some lenders have charged interest rates as high as 30% or more, although this practice is generally considered unethical and exploitative. A more reasonable estimate for the absence of usury laws would be around 24%. Therefore, the best choice is D) 24.
Learning Objectives
- Detail the relationship between usury law provisions and their influence on the structure of interest rates, considering the perspective of both borrowers and lenders.