Question: Banks account for different default risks in pricing a loan by: Select one: a. reducing the proportion of equity financing used in the cost of

Banks account for different default risks in pricing a loan by:

Select one:

a. reducing the proportion of equity financing used in the cost of funds estimate

b. varying the loan payment over the life of the loan to reflect varying risk

c. tying the loan rate to the banks base cost of funds

d. adding a risk premium to the loan rate.

e. charging a dollar fee at loan origination that varies inversely with risk.

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