Why might banks charge higher interest rates to someone who they thought might not pay their loans?

select the best answer from the choices provided.
banks typically penalize people who have not used their money wisely to encourage better financial skills. higher interest rates are one of those penalties.
people who might not pay back their loans are a greater risk to the bank. the higher rates compensate the bank for the risk they take.
the federal government sets the interest rates banks must charge based on different risk factors. banks are following the law when charging high interest rates.
banks want to discourage people with poor spending habits from borrowing money. banks do this by charging higher interest rates.

answer: c, the green line

step-by-step explanation:

there is no black line, eliminate b.

simple interest implies periodic payments, but the red line shows no payments, eliminate d.

simple interest has equal payments. if paid say every day, the graph is about a straight line (actually a stairstep).

the yellow line is not straight, eliminate a.

check: the green line is straight, answer is c.

simple interest with positive interest rate gives a straight line sloping up to the right. green line:

g(t) = $100 + ($200-$100) ÷ (20 years) × (t years)

= $100 + (4%/year) × ($100)(t years)

incidentally, the yellow line curving upward represents continuously compounded interest

y = $100 × 2^(t years / (14 assuming the yellow line hits $200 at 14 years. 2^0 is 1, so y(0) = $100; 2^(14/14) is 2, so y(14) = $200.

answer: it actually depends on which is the independent variable and which is the dependent variable. let us say we're looking at a linear equation. y=2x+3. we theoretically could switch the equation to be x=(y-3)/2 and it would be the same line. so either a causes b or it can be that b causes a. so technically the answer is false

step-by-step explanation:

a ≈ 172.05

step-by-step explanation:

the pictures.

answer is  

a.

p = 78

step-by-step explanation: