Which is better, a fixed-rate loan or a variable-rate loan?

A) A fixed-rate loan, because the lender bears the risk that interest rates will go up
B) A fixed-rate loan, because they generally cost less than variable-rate loans
C) A variable-rate loan, because they generally cost less than fixed-rate loans
D) A variable rate loan, because the lender bears the risk that interest rates will go up
E) Neither is necessarily better; the choice illustrates the "risk and return go hand in hand" principle.

Answer: E