1. If a bank has assets of 10 loans each for $100,000 at an annual interest rate of 8% and it costs the bank $3,000 per loan, what is the net interest margin?

A.1%

B.2%

C.2.5%

D.5%

E.None of the above

2. Who are the people that are likely to agree to loans with higher interest rates?

A. People with excellent credit ratings

B. People who have a lot of options in terms of where to obtain a loan

C. People with poor credit who can not get a loan elsewhere

D. People with large savings accounts

3. Why might people be unable to obtain a loan at another bank?

A.They have poor credit

B.They do not have a job or any means of paying their loan back

C.They have a previous history of defaulting on loans

D.All or any of the above might make it where people cannot obtain loans

4. Offering a loan to a person with poor credit is considered a risky loan.

True or False

5. Banks want to offer loans with high interest rates.

True or False