Test Your Knowledge of Loans

• Fixed interest loans have a constant interest rate while floating interest loans have a variable interest rate (correct)
• Floating interest loans have a lower interest rate than fixed interest loans
• Fixed interest loans have a lower interest rate than floating interest loans
• Floating interest loans have a constant interest rate while fixed interest loans have a variable interest rate

• They have a high interest rate initially
• They have a low interest rate initially but it increases later (correct)
• They are not available to subprime borrowers
• They are only available to prime borrowers

• Prime borrowers have a history of defaulting on loans while subprime borrowers do not
• Prime borrowers have a higher credit score than subprime borrowers
• Prime borrowers have the capacity to repay loans while subprime borrowers do not (correct)
• Prime borrowers have a lower income than subprime borrowers

<p>Borrowing too much money than one can pay back (D)</p> Signup and view all the answers

<p>When a weak bank keeps giving new loans to subprime or overleveraged borrowers (C)</p> Signup and view all the answers

<p>When a large corporate and a public sector bank have weak balance sheets (C)</p> Signup and view all the answers

<p>The ratio of a company's earnings before interest and taxes (EBIT) to its interest expenses (B)</p> Signup and view all the answers