February 2007 - DICO

Differentiate between a secured and an unsecured loan. Who bears most of the risk in a fixed-rate loan? Why would bankers prefer to charge floating rates, especially for longer-maturity loans? A secured loan is backed by some of the collateral that is pledged to the lender in the event of default. A lender has rights to the collateral, which can be liquidated to pay all or part of the loan. In ... ................
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