Which factor or factors listed below are internal influences on a loan’s interest rate?I. current and prospective inflationII. collateral offered by the borrowerIII. the strength of the economy

An internal influence comes from the borrower or the specific loan. The collateral offered by the borrower (II) is an internal factor because it affects the lender’s risk if the borrower does not repay. Inflation and the strength of the economy are broader economic conditions, so they are external influences. Therefore, the correct choice is “II only.”

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