If a lender faces a potential loan applicant pool made up of equal amounts of low risks and high risks, will charging an average interest rate for all provide the average (expected) return? Explain.
If a lender faces a potential loan applicant pool made up of equal amounts of low risks and high risks, will charging an average interest rate for all provide the average (expected) return? Explain.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter29: Interest, Rent, And Profit
Section: Chapter Questions
Problem 6QP
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If a lender faces a potential loan applicant pool made up of equal amounts of low risks and high risks, will charging an average interest rate for all provide the average (expected) return? Explain.
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