Objective Type Business Questions

Loan payment schedule of a 1-year, fixed-size ...

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1. The amount of money borrowed or invested is called the maturity value.
True
False

2. When solving a simple interest problem, the rate should be written as a decimal number.
True
False

3. The interest paid on a $10,000.00 loan for 2 years at 13.5% interest is $1,250.00.
True
False

4. The formula to find the rate is interest divided by (principal times time).
True
False

5. 8% for 45 days is equal to 0.01.
True
False

6. The cash price of an item is the amount you would have paid if the full amount was paid at the time of purchase.
True
False

7. The total cost of an installment purchase is equal to the number of payments times the amount of each payment minus the down payment.
True
False

8. The Truth in Lending Act requires the APR be accurately stated to the nearest of 1 percent.
True
False

9. The monthly payments are calculated by adding the finance charge and the amount financed and dividing by the number of payments in the loan.
True
False

10. The amount of a loan is:
the installment price + interest – down payment
installment price – interest – down payment
installment price – interest + down payment
installment price – payments + purchases
none of the above

11. John purchased a new boat for $24,600.00.  He put a $5,400.00 down payment on it.  The bank’s loan was for 60 months.  Finance charges totaled $6,400.00.  His monthly payment was:
$106.67
$410.00
$250.00
$426.67
none of the above

12. A fraction that shows what portion of the total finance charge has not been paid at the time a loan is paid off is called the:
finance rebate
refund fraction
pay-off ratio
constant ratio
none of the above

13. The formula for ordinary interest using exact time is:
exact days divided by 365
exact days divided by 360
30 divided by 360
30 divided by 365
none of the above

14. The proceeds of a $7,500.00, 10% simple discounted note for 85 days is:
$7,674.66
$7,322.92
$7,677.08
$7,325.34
none of the above

15. In a non-interest bearing note, the maturity value is the same as the:
proceeds
principal
discount
principal plus interest
none of the above

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