Compensation for the risk of not recovering cash flow

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comment about the following statement and question.

“The rate of interest represents the compensation to the lender for the administrative cost incurred, such as rent, salaries, air conditioner, and other costs. Also a compensation for the risk of not recovering the cash flow that was lent, and for an additional profit.”

Why do you think in the Puerto Rico Bank and Financial sector, the interest rate that is paid to the clients in the savings accounts is so low? Few years ago the interest rates were much higher.

Reference no: EM131950478

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