when a creditworthy business takes on an unsecured, short - term loan, which kind of interest rate will it…
when a creditworthy business takes on an unsecured, short - term loan, which kind of interest rate will it likely be charged?\nprime interest rate plus a few percent\nprime interest rate\nannual percentage rate\ndiscount rate
Answer
Brief Explanations:
A credit - worthy business is a low - risk borrower. Prime interest rate is the rate banks charge their most credit - worthy customers for unsecured loans. So, a credit - worthy business taking an unsecured, short - term loan is likely to be charged the prime interest rate. Annual percentage rate is a broader term that includes all costs of borrowing and is not specific to the type of rate for a credit - worthy business's unsecured short - term loan. Discount rate is related to central bank lending and not applicable here. Adding a few percent to the prime rate would be for riskier borrowers.
Answer:
Prime interest rate