The Interest Rate Charged on Secured Short-Term Loans to a Corporation

Multiple Choice

The interest rate charged on secured short-term loans to a corporation is generally higher than that charged on unsecured short-term loans because

A) lenders of secured loans must pay more for their funds.
B) it is costly to negotiate and administer secured loans.
C) secured loans are less risky than unsecured loans.
D) the risk of default is lower on secured loans.