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1) According to the Kathy Ruply, banks charge interest rates when loaning money to businesses based...

1) According to the Kathy Ruply, banks charge interest rates when loaning money to businesses based upon which main factor?

a) Return on Equity b) Assumed risk c) The Firm's competitive position d) Annual Revenue

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Answer #1

1. According to Kathy Ruply Bank charge interest rates from firms based on ASSUMED RISK as Risk is the most important factor that decides the loan repayment capacity of the borrower. If the borrower has a higher chance of default, the rate of interest will be much higher than that of those have a lower default risk .

Return on equity cannot be deciding factor as Good firms also have low return than bad firms.

Revenue & financial competitiveness are also not related to loan.

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