Which of the following correctly describes what sub-prime lending is? (1) Lending to the people with less than ideal credit status. (2) Lending to the people who are high value customers of the banks. (3) Lending to those who are not a regular customer

Sub-prime lending refers to lending to borrowers with less-than-ideal credit status or higher credit risk (Option 1). It does NOT refer to high-value customers (Option 2) or non-regular customers (Option 3). Sub-prime borrowers typically have lower credit scores and higher default risk, which is why these loans carried higher interest rates and contributed to the 2008 financial crisis.