A local restaurant decides to take out an amortized loan as follows: Amount of loan = $50,000; Interest rate = 8%; Term = 5 years. After two instalments the borrower decides to pay off the loan. What is the payoff amount? a. $32,273 b. $22,331 c. $31,543 d. $31,670
A local restaurant decides to take out an amortized loan as follows: Amount of loan = $50,000; Interest rate = 8%; Term = 5 years. After two instalments the borrower decides to pay off the loan. What is the payoff amount? a. $32,273 b. $22,331 c. $31,543 d. $31,670
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A local restaurant decides to take out an amortized loan as follows: Amount of loan = $50,000; Interest rate = 8%; Term = 5 years. After two instalments the borrower decides to pay off the loan. What is the payoff amount?
a.
$32,273
b.
$22,331
c.
$31,543
d.
$31,670
Accrual basis in loan pricing refers to
a.
the number of days used to calculate interest
b.
the effective yield
c.
the method of accounting used to record the loans
d.
none of the above
Which of the following accurately describes the other real estate owned that appears as an asset on the bank’s balance sheet ?
a.
includes premises and equipment
b.
includes only the land owned by the bank.
c.
usually represents property obtained through foreclosure on problem loans
d.
is limited to the equipment owned by the bank
Collateral does not reduce the risk of a loan per se, because
a.
it is not part of the loan agreement
b.
the risk of a loan is determined by the borrower’s willingness and ability to repay the loan
c.
it may be worth less than the bank thinks
d.
the bank may not have title to the collateral
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