Question

Read the graph that displays interest and total payments on a loan. Banks make the most money and take the most risk with an interest rate of 5 percent. 10 percent. 15 percent 18 percent.

Answer 1

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

18 percent because the more interest you give in the more risk you'll lose it.

Answer 2

The correct answer is: "18 percent"

The interest rate represents the retribution charged by a bank when delivering a loan to a consumer. This price charged is higher when the underlying operation is riskier (for example, if there is a risk of default because the borrower is not very reliable), so that the bank is willing to assume the risk involved and to deliver the amount of the loan.

The chart attached shows how the bank delivers a loan of $10,000 and the amount paid back by the borrower is the highest when the interest rate charged is the 18%.