Suppose medical research confirms earlier speculation that red wine is good for you. Why would banks be willing to lend to vineyards that produce red wine at a lower interest rate than before?

Question

Tania Decker

Business

12 February, 19:49

Suppose medical research confirms earlier speculation that red wine is good for you. Why would banks be willing to lend to vineyards that produce red wine at a lower interest rate than before?

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Answers (2)

Know the Answer?

Maddison Moore · Answer 1

Answer:The future prospects for the vineyards have improved, reducing the risk involved in lending to them.

Explanation: Banks and other financial institutions will lend more money to Businesses with better future prospects because they know that the ability to pay back the loan will be guaranteed. They will also easily give out loan to such a business organization because they are also aware the the risk of not paying back the loan amount is reduced, they also going to give out such low interest loans because they will want to encourage others similar Businesses to patronize their services.

Cherish Kaufman · Answer 2

Answer and explanation:

In case medical researches confirm red wine is good for the human body, banks are likely to offer vineyards that produce red wine loans at lower interest rates to promote larger borrowings. Banks will not be losing money with lower interest rates. They will be earning more, instead, if more vineyards start investing more and in larger amounts.