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The interest rate a company pays on 1-year, 5-year, and 10-year loans is a function of:.

Sagot :

Parrain

A company will pay interest based on its credit rating and the length of time over repayment is scheduled to occur (1-year, 5- years, or 10 years).

How is interest decided?

  • It is based on various risks such as credit risk and maturity risk.
  • Credit risk of a company is shown in its credit rating.
  • The maturity risk increases as the length of time to repayment increases.

The interest paid will therefore be dependent on the credit rating of the company and the term of the loan that it took out as these show different types of risk.

In conclusion, option A is correct.

Find out more on maturity risk at https://brainly.com/question/24780094.

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