26
QuizMultiple Choice

The American Market Economy — Test

Question 26 • Economics

Banks make the most money and take the most risk with an interest rate of

Answer
A
5 percent.
B
10 percent.
C
15 percent
D
18 percent.

Explanation

A higher interest rate earns the bank more interest if the borrower repays, but it also makes repayment more costly and increases the risk of default. Of the rates listed, 18 percent is highest, so it offers the most potential interest income and carries the most risk.

AI-written and checked against the verified answer.

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