Question

Emil borrowed money so he would be able to afford to add a screened-in porch to the back of his house. When he applied for the loan, the rate on the loan was very low based given the current market trends. Over the following months, however, the market fluctuated a great deal, and suddenly he was faced with higher rates for the same loan. Which type of financial risk did Emil face?
a. income risk
b. interest rate risk
c. personal risk
d. inflation risk

Answer 1

Answer:

since i chose inflation risk and that was incorrect the only other logical option for me would be option B. Interest rate risk

Explanation:

Answer 2

The financial risk that Emil faced when he borrowed money at a low rate but due to market fluctuations, he faced higher rates later was b. interest rate risk.

What is interest rate risk?

Interest rate risk is a financial risk that results from changes in the interest rate of an investment or loan.

Increasing credit risk gives rise to increased debt exposure.  This can force a lending institution to increase the interest rate if the contract recognized a fluctuating rate (not fixed) at the initiation stage.

Thus, the type of financial risk that Emil faced when he borrowed money at a low rate but due to market fluctuations, he faced higher rates later was b. interest rate risk.

Learn more about interest rate risks at https://brainly.com/question/13163076