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Multiple Choice QuestionThe cost of issuing a large loan and a small loan are about the same in dollars, but the cost is Blank______.Multiple choice question.equal to the percentage of the smaller loangreater as a percentage of the smaller loansmaller as a percentage of the smaller loangreater as a percentage of the larger loan

Question

Multiple Choice QuestionThe cost of issuing a large loan and a small loan are about the same in dollars, but the cost is Blank______.Multiple choice question.equal to the percentage of the smaller loangreater as a percentage of the smaller loansmaller as a percentage of the smaller loangreater as a percentage of the larger loan

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Solution

The correct answer is "greater as a percentage of the smaller loan".

Here's why:

  1. The cost of issuing a loan is generally fixed, meaning it doesn't change whether the loan is large or small. This could include things like the cost of processing paperwork, doing credit checks, etc.

  2. When you express this cost as a percentage of the loan, it becomes a larger percentage for smaller loans. This is because the same dollar amount is a larger portion of a smaller total.

  3. Conversely, the cost is a smaller percentage of larger loans because the same dollar amount is a smaller portion of a larger total.

So, the cost of issuing the loan is greater as a percentage of the smaller loan.

This problem has been solved

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