Question

Each of the following is a key difference between permanent commercial loans and construction commercial loans...

  1. Each of the following is a key difference between permanent commercial loans and construction commercial loans EXCEPT.
  1. Construction loans are shorter in duration that permanent loans
  2. Permanent loans have lower default risk.
  3. Construction loans have higher interest rate risk.
  4. Permanent loans are distributed all at once instead of gradually.
  5. All of the following are key differences between permanent and construction loans.
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Answer #1

Option C is correct

We see that Construction loans have higher interest rate risk. This statement is false because construction loans are short term and hence have lower interest rate risk.

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