Question

Borrowing or lending money at an interest rate significantly different from the market interest rate is a likely example of a(n) ________ transaction.

Answer 1

When a borrower or lender agrees to an interest rate significantly different from the market interest rate, it is an example of a non-market transaction. This can happen due to personal relationships, special circumstances, or specific agreements between the parties involved.

Step-by-step explanation:

When a borrower or lender agrees to an interest rate significantly different from the market interest rate, it is an example of a non-market transaction. Non-market transactions occur when parties deviate from the prevailing market conditions.

For example, if the market interest rate is 5% and a borrower agrees to a rate of 3%, it is a non-market transaction since the rate is significantly lower than the market rate.

This may happen due to personal relationships, special circumstances, or specific agreements between the parties involved.

However, it's important to note that non-market transactions can carry certain risks or implications, such as potential conflicts of interest or legal considerations.