Question

The term risk, when applied to borrowers, specifically refers to

a. lifestyles.
b. the risk that the borrower will not get a loan.
c. the risk associated with a major purchase.
d. the likelihood that the borrower will not pay the loan.

Answer 1

D.  Lenders are worried that the borrower won't pay them back, and they assess how likely that is to happen by looking at the borrower's income, other assets, credit history, etc.