Q: Which of the following is true of an unsecured loan? A. They are exclusively for cars, houses, and…
A: Loan can be defined as money that somebody lends other person in exchange of some interest that is…
Q: Which of the following is not a source of informal short-term finance? * A. Accrued wages B…
A: Financing is an act or a process of providing funds to the business in order to operate the business…
Q: nterest is a method of calculating the interest to be paid on a loan by combining the principal…
A: Add on interest refers to the method which is used when the person acquire the loan or the mortgage…
Q: Because banks accept short term fixed rate deposits they prefer to give loans where loan rate floats…
A: Fixed interest rates are 1%-2.5% higher than the floating interest rate. The increase and decrease…
Q: A forward rate is a borrowing/lending rate for a loan to be made at some future date. Select…
A:
Q: How can effective APR differ from nominal interest? A. Effective APR takes loan fees into account,…
A: Nominal interest rate is the stated interest rate on a loan. It is the interest rate which does not…
Q: The amount added to the principal amount of money using simple interest rate compared to the…
A: Interest is the amount of money a lender or financial institution receives for lending out money.
Q: In a mortgage loan that requires periodic paym= fully amortize the loan, the final that do not ment…
A: Mortgage securitization is the process of clubbing mortgages of individuals having same features to…
Q: Which of the following type of loan is best used for temporary shortfalls of income? a. Secured…
A: Loans can be short term loans or long term loans
Q: q17 Which of the following types of loans has lower interest rate compared to others? a. Line of…
A: Which of the following types of loans has lower interest rate compared to others? a. Line of…
Q: Assuming the borrower is in no danger of default, under what conditions might a lender be willing to…
A: There can be majorly two possibilities under which a lender may accept a lesser amount than that of…
Q: Which of the following statements regarding fixed-rate loans is true? Group of answer choices a.…
A: Fixed rate loans are loans which have a fixed rate of interest.
Q: What is the advantage of a variable-interest loan? Protects the borrower from rising interest rates…
A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…
Q: Describe a short-term financing option and discuss the advantages and disadvantages. Is there a…
A: Short term financing: Any loan that is obtained for a short period of time is Short Term financing.…
Q: Explain the addition to the interest rate, HELOC borrowers consider the issues?
A: Home buyers mostly take loans to buy the home and they will pay the debt in equated installments.…
Q: Which of the following statements is not true about mortgages? The ending balance of an amortized…
A: Mortgage: A mortgage is considering as an instrument of debt, protected by the security of stated…
Q: What is defined as the interest on a load or principal that is based only on the original amount of…
A: The right answer is option (D) simple interest
Q: There is a formula that will find the APR, i, of a single payment loan but not for a series of…
A: The term “annual percentage rate (APR)” refers to the annual rate of interest charged to borrowers…
Q: hich of the following is not a way in which banks lend short-term unsecured loans? a. Through a…
A: Banks give short term credits to the business to increase the business and grow business and provide…
Q: What is the advantage of a variable-interest loan? Protects the borrower from rising interest rates…
A: Variable interest loan refers to the loan on which the interest rate is not fixed, the interest rate…
Q: Why would lenders, in general, tend to set loan maturities (not amortization, but when the loan…
A: Loan Maturity: The time period for which a loan is extended is known as the loan period. The date…
Q: Imagine that the table above outlines deposits rates. Assuming A wants a fixed rate deposit and B…
A: There are two companies A wants a fixed rate deposit and B wants floating rate deposit, comparative…
Q: Required Correct Option 1- The amount which borrower has to pay to lender for taking and using his…
A: Issuing the financial instruments will increase the capital , as well as the capital of the company.…
Q: Which of the following statements is not true about mortgages? O The ending balance of an amortized…
A: Amortized loans are a type of loan which repays the loan by regular interval payments for a…
Q: Which one is the contractual equation for buying an FRA? a.) Loan with maturity t2 plus Deposit with…
A: FRA (Forward Rate Agreement) refers to personalised financial contracts that are traded Over the…
Q: The amount added to the principal amount of money using simple interest rate compared to the…
A: Simple interest refers to interest earned on principal. On the other hand, compound interest is…
Q: Can the actual real rate of interest be negative? When ? Can the expected real rate be negative?
A: Yes, the actual real interest rate can be negative. This can happen when the actual inflation rate…
Q: Explain how an installment loan differs from revolving credit in terms of risk and the nature of the…
A: Installment credit is a type of loan in which the borrower receives a defined, or limited, sum of…
Q: What’s the difference between simple interest and add-on interest as bankers usethese terms?
A: Add on interest is calculated by totaling the principal borrowed and interest and then multiplying…
Q: Explain the following terms:a. 2/10, n/30b. 3/15, n/60c. n/40d. What is the effective rate of…
A: A credit term refers to the payment terms referenced on the receipt at the hour of purchasing…
Q: REATE AN EXAMPLE PROBLEM WITH CASHFLOW a.) nominal compound interest b.) continuous compound…
A: Solution Example of nominal compound interest Calculate the future value of $12345 deposited today…
Q: Which of the following is the function of the financial market ? Select one : a . It decides the…
A: The financial system is the most important factor in economic transformation. Finance helps bridge…
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Solved in 3 steps
- 1. True or false. Rate of return is the interest earned on the unpaid balance of an amportized loanWhich is true of variable rate loans? A) the rate can only go up B) the interest rate can go up or down, depending upon the index it is tied to C) the interest rate can fall below 0 D) the rate can only go downTo account for a down payment, adjust the _____ of the loan by subtracting it from the loan amount. O present value (pv) future value (fv) rate O type
- If you were taking out a loan and the interest rate was the same either way, would you want it to be a simple interest loan or a compound interest loan?Δ%(MV) = -MD*Δr When we use this equation to evaluate a loan, this equation does not totally reflect the change in the present value of loans mainly because of the ignorance of which of the following factors a. Convexity b. Maturity c. Duration d. ImmunizationWhich of the following statements correctly describes aspects of simple interest as discussed in lectures? Group of answer choices A) With simple interest, the future value of any cash flow is simply its current value discounted back at a rate of r% per period for n periods. B) None of the other statements are correct C) A loan that has been created that pays simple interest, will involve interest payments that are calculated on the basis of both the principal amount borrowed as well as any interest that has accumulated to date. D) By convention, simple interest is the main method used for the pricing of long-term bonds. E) More than one of the other statements are correct
- In the PMT function, what is not true about the rate argument? Group of answer choices It assumes an annual interest rate. It can contain references to fields. It is optional. It reflects the interest charged on a loan.Say you are a bank and want to reduce the duration of your assets. One way of doing so would be to use an interest rate swap to change the payments you receive from fixed to floating rate. Question 1 options: True FalseConsider the following problem with asymmetric information in the credit market .Suppose the lending interest rate (r1) is 3.5% and the borrowing interest rate (r2) is 10%. What fraction of borrower will not default on their loans. a)94.1% b)5.9% c)96.1% d)3.9% e) non of the above.
- A loan with compound interest always cost more than a loan with simple interest. True or falseWhich of the following type of loan is best used for temporary shortfalls of income? a. Secured loans b. Long Term Loan c. Line of Credit d. Short-Term Loanq17 Which of the following types of loans has lower interest rate compared to others? a. Line of Credit b. All the options are wrong c. Long Term Loan d. Short-Term Loan q18 Which of the following is not a Money Market Instrument? a. Certificate of Deposit b. Debentures c. Commercial Paper d. Treasury Bill