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1. Why would a lender charge a lower contract interest rate coupled with a front-end fee? Why not simply incorporate the effective rate into the
1. Why would a lender charge a lower contract interest rate coupled with a front-end fee? Why not simply incorporate the effective rate into the contract rate?
2. Because inflation causes real interest rates to be lower, wont lenders simply factor inflation into their contract rates so that the real rate remains constant? With rational borrowers and lenders, shouldnt adjustments for anticipated inflation cancel out inflations impact?
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