A bank has a cost of funds of 10%, a default rate of 5% and an underwriting transaction cost of $25 per loan. To break even on a $100 loan, the bank must charge $10 to cover cost of funds, $5 to cover expected defaults, and $25 to cover transaction cost, totaling $40 or an interest rate of 40%. On a $70 loan, using the same cost of funds rate, default rate, and underwriting transaction cost above, the break even rate would be ____%. The interest rate for the $100 loan is ______ than the rate for the $70 loan due to ______ that is a lower percentage of the principal.

	a.	41%, higher, variable cost
	b.	51%, lower, fixed cost
	c.	41%, lower, fixed cost
	d.	51%, higher, variable costs