Question

In situations with high risks, credit might create further problems for the borrower. Explain.

Answer 1

This is true that in circumstances of huge risks, credit produces more problems for the borrower on account of the following reasons:

1. The borrower has to repay a fixed percentage on the capital obtained, whereas the interest on investment may or may not come due to the ambiguity of business and economic situation.

2. If the borrower defaults to repay the pledged capital to the banker, then he might face a constitutional case in the court of law which will generate an additional predicament for the borrower.

3. The huge risk is correlated with a high rate of interest. Paying off high rates of interest will constitute a difficulty for the borrower if profits from the business are not sufficient then the situation of debt will arise.

Answer 2

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$\bf\Huge\red{\mid{\overline{\underline{ ANSWER }}}\mid }$

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$\Large\fbox{\color{purple}{QUESTION}}$

in situation with high risk credit might create further problems for the borrower explain

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$\Large\fbox{\color{purple}{ SOLUTION }}$

yes this is also known as debt trap taking credit in walls and interest rate on the loan and if it is not paid back then the borrower is forced to give up his coat collatera yes this is also known as debt trap taking credit in walls and interest rate on the loan and if it is not paid back then the borrower is forced to give up his Collateral obsessed used as the guarantee

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