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A borrower requests a 150 loan from the bank the borrower

A borrower requests a $150 loan from the bank. The borrower is A with probability 0.35 and type B otherwise. A always repays but type B only repays with probability 0.7. If the bank cannot observe the borrower's type, what is the competitive interest rate the bank can offer?

24.3%
27.5%
31%
33.3%

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Business Management: A borrower requests a 150 loan from the bank the borrower

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Business Management: A borrower requests a 150 loan from the bank the borrower

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