Post Utme Covenant University 2022 Commerce Question 14

Practice objective / multiple choice question 14 from the 2022 Post Utme Covenant University Commerce examination.

Post Utme Covenant University 2022 Commerce Objective / Multiple Choice
Question 14 POST_UTME_COVENANT_UNIVERSITY • 2022 • COMMERCE • objective

A bank is considering offering a new type of loan to its customers. The loan will have a variable interest rate that is tied to the prime lending rate. Which of the following is a potential risk associated with this type of loan?

Answer Options

A. The borrower may default on the loan.
Correct Answer B. The interest rate may increase rapidly.
C. The borrower may not be able to afford the loan payments.
D. The bank may not be able to recover the loan amount.
Correct Answer
B
Correct Option:
The interest rate may increase rapidly.

About This Question

This is Post Utme Covenant University 2022 Commerce Question 14. It is one of the objective questions from the 2022 Post Utme Covenant University Commerce examination.

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