Question

Since commercial finance companies offer loans to higher-risk customers than commercial banks, the interest rates they charge are usually ________ than rates charged by banks.A. higherB. lowerC. more predictableD. subject to lower taxes

Answer 1

The correct answer is (A)

Step-by-step explanation:

Commercial finance is another way to generate funds, but they come with certain drawbacks compared to commercial banks. Commercial finance usually give loans to customers who are interested in more risky investments. The interest they charge is usually higher which can only be paid if a client invests in riskier investments to earn higher returns.