Lenders Recognize That by Having an Interest in Collateral They

Multiple Choice

Lenders recognize that by having an interest in collateral they can reduce losses if the borrowingfirm defaults,

A) therefore lenders prefer to lend to customers from whom the are able to require collateral.
B) and the presence of collateral reduces the risk of default.
C) but the presence of collateral has no impact on the risk of default.
D) therefore lenders will impose a higher interest rate on unsecured short-term borrowing.