Question

which factor or factors listed below are internal influences on a loans 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
d

Explanation:

To determine internal influences on a loan's interest rate, we analyze each factor:

• Factor I (current and prospective inflation) is an external macroeconomic factor, not internal to the loan or borrower.
• Factor II (collateral offered by the borrower) is an internal factor as it relates to the borrower's specific offering for the loan.
• Factor III (the strength of the economy) is an external macroeconomic factor, not internal to the loan transaction.

Only Factor II is an internal influence.

Answer:

c. II only