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Business Studies

Debentures

The high rate...

Question

The high rate of interest on borrowing _____.

A

increase the repayment ability.

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B

increase the debt burden.

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C

increase the easy accessibility to lenders.

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D

increases easy repayment options

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Solution

The correct option is C increase the debt burden.
Money borrowed on higher rates of interest will usually increase the debt burden.
Informal sources of credit charges higher rates of interest.
Due to higher rate of interest the informal sources of credit are exploitative in nature.

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