Question

Your neighbor asks you to invest $500 in her new business. You want to invest but are concerned because your neighbor has not had any business experience. How can you offset your risk?

A. Ask for a high interest rate in exchange for the loan.
B. Invest your $500 in a certificate of deposit.
C. Use the $500 to open a savings account.
D. Lend you neighbor the $500 and keep your fingers crossed.

Answer 1

a. ask for a high interest rate in exchange for the loan

Step-by-step explanation:

grad point checked

Answer 2

My answer is A. ASK FOR A HIGH INTEREST RATE IN EXCHANGE FOR THE LOAN.

The venture is high risk, thus the need for high interest rate. Principal amount will be collected faster if the interest earned on the loan is higher than normal.

Choices B and C offers no risk to you but it doesn't help your neighbor.
Choice D is not a sound business risk.