Lenders perceive that you are risky so you must pay 12


Question: Lenders perceive that you are risky, so you must pay 12 percent annual interest to borrow from one of them. You only receive 6 percent on funds you have deposited in the bank. Do the opportunity costs of borrowing and using your own funds differ in this example? Explain why or why not.

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Microeconomics: Lenders perceive that you are risky so you must pay 12
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