Main content ing EAR with Points [LO4] You are looking at a one-year loan of $10,000. The interest rate is quoted as 9.7 percent plus 2 points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay 2 points to the lender up front and repay the loan later with 9.7 percent interest. What rate would you actually be paying here?
Main content ing EAR with Points [LO4] You are looking at a one-year loan of $10,000. The interest rate is quoted as 9.7 percent plus 2 points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay 2 points to the lender up front and repay the loan later with 9.7 percent interest. What rate would you actually be paying here?
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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![Main content
ing EAR with Points [LO4] You are looking at a one-year loan of $10,000. The interest rate is quoted as 9.7
percent plus 2 points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one
are common with home mortgages. The interest rate quotation in this example requires the borrower to pay 2 points to the
lender up front and repay the loan later with 9.7 percent interest. What rate would you actually be paying here?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F49b6872f-8540-4d67-8f44-b13749eac041%2Fe1de8844-3422-425e-a8da-5c4004d90a14%2Fmdiywf_processed.png&w=3840&q=75)
Transcribed Image Text:Main content
ing EAR with Points [LO4] You are looking at a one-year loan of $10,000. The interest rate is quoted as 9.7
percent plus 2 points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one
are common with home mortgages. The interest rate quotation in this example requires the borrower to pay 2 points to the
lender up front and repay the loan later with 9.7 percent interest. What rate would you actually be paying here?
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