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>borrow at 3% invest at 10% There is a reason that is an old banker's adage. My response would be, why would you loan to me at 3 when you could invest at 10? T
by jjeaff 5y ago
>borrow at 3% invest at 10%
There is a reason that is an old banker's adage. My response would be, why would you loan to me at 3 when you could invest at 10? The answer is risk. The banker knows how to calculate risk.
- wetjen 5y agoThat is certainly part of the answer. The other part is that the banker doesn’t have an option to directly invest the funds. Banks are constrained in this regard. Money earmarked for lending cannot instead be invested by the bank.