Question

which factor or factors listed below are internal influences on a loan’s interest rate?
i. current and prospective inflation
ii. collateral offered by the borrower
iii. the strength of the economy
a. i only
b. i and iii
c. ii only
d. ii and iii

please select the best answer from the choices provided

∘ a
∘ b
∘ c

Explanation:

• Internal influences on a loan's interest rate come from the borrower or the loan itself.
• I (inflation) and III (economy strength) are external (macroeconomic) factors.
• II (collateral from borrower) is internal, as it relates to the borrower's offer for the loan. So only II is an internal influence.

Answer:

c. II only