Question: Consider two loans that are otherwise identical, except that Loan A has a higher chance of borrower default and Loan B has a lower chance

Consider two loans that are otherwise identical, except that Loan A has a higher chance of borrower default and Loan B has a lower chance of borrower default. Which loan would you expect to charge more interest-all else equal-and why?\ Loan A would charge more interest because it is less risky than Loan B.\ Loan A would charge more interest because it is riskier than Loan B.\ Loan B would charge more interest because it is less risky than Loan A.\ Loan B would charge more interest because it is riskier than Loan A.

Consider two loans that are otherwise identical, except that Loan A has a higher chance of borrower default and Loan B has a lower chance of borrower default. Which loan would you expect to charge more interest-all else equal-and why? Loan A would charge more interest because it is less risky than Loan B. Loan A would charge more interest because it is riskier than Loan B. Loan B would charge more interest because it is less risky than Loan A. Loan B would charge more interest because it is riskier than Loan A

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