Question

Finance companies have enjoyed very high rates of growth because they:________.

a. are willing to lend to riskier customers than commercial banks.
b. charge higher rates on lower risk loans.
c. do not have ties or affiliations with manufacturing firms.
d. face very high levels of regulation, which assures their success.
e. do not sell the loans that they originate.

Answer 1

a. are willing to lend to riskier customers than commercial banks.

Step-by-step explanation:

Financial companies are those companies which loan funds to individuals and businesses.

Unlike commercial banks who lend funds only to highly credit worthy customers, financial companies are liberal in their lending and are willing to finance riskier projects and extend credit to individuals with low credit rating.

As a consequence of assuming higher risk than banks, such companies also charge a higher rate of interest than banks.

Owing to above, finance companies enjoy higher rate of growth.