Question

What are high-risk loans?

A).loans that are invested in high-risk stocks
B).loans that are given for risky home properties
C).loans that are given to consumers with bad credit
D).loans that are provided by commercial banks

Answer 1

The answer should be C

Answer 2

The answer is: C). loans that are given to consumers with bad credit

Consumers with bad credit tend to have high chance of not be able to give back their loan. This is why these consumers are considered to be 'high-risk' in the perspective of the credit providers.

Bad credit usually obtained due to inability to pay credit in the past, had higher spending compared to the amount of income, and do not possess any assets that can be used as collateral.