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enders face various choices of who to lend to with varying amounts of risk. Why might lenders put money in loans with relatively high risk?
enders face various choices of who to lend to with varying amounts of risk.
Why might lenders put money in loans with relatively high risk?
Because they want smaller firms to get their fair share of loans.
Because they are stupid or are thrillseekers.
Because riskier loans typically have higher returns.
Because if all lenders avoided lowrisk loans, it would result in a financial crisis.
Because assuming enough risk qualifies lenders for a large government tax credit.
Because riskier loans are insured by the FDIC, an agency of the federal government.
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