Asked by Tanisha Campbell on Jun 30, 2024
Verified
Ordinarily, the longer the maturity of the loan, the higher the rate of interest.
Maturity
The state at which an entity, such as a financial instrument or product, has fully developed or reached its maximum potential.
Interest
The cost of borrowing money, often expressed as a percentage of the amount borrowed.
- Comprehend the effects of interest rates, durations of loans, and the economic setting on decisions related to financing.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
True
Explanation :
This is because longer-term loans typically carry more risk, including the risk of inflation and the uncertainty of economic conditions over a longer period, which lenders compensate for with higher interest rates.
Learning Objectives
- Comprehend the effects of interest rates, durations of loans, and the economic setting on decisions related to financing.