4 ms·
Should just cut interest all together. It makes no sense on a guaranteed loan. There is no risk at all.
by downrightmike 4y ago
Should just cut interest all together. It makes no sense on a guaranteed loan. There is no risk at all.
- hirundo 4y agoThe primary value of interest is in exchange for the time value of money, the opportunity cost of not being able to use it elsewhere. That remains even if risk reaches zero. If we loan it to Alice, we can't loan it to Bob. Interest is the price that Alice pays for that.