What interest rate would make it worthwhile to incur a compensating balance of $15,000 in order to get a 1-percent lower interest rate on a 1-year, pure discount loan of $250,000? Is it worth incurring the compensating balance to obtain the lower rate?

When you borrow money, you typically have to pay an interest rate. What does interest represent? a) The cost of borrowing money b) The profit earned on an investment c) A bank fee d) A penalty for late payment????

If an interest rate of 8.9% compounded semi-annually is charged on a car loan, what effective rate of interest should be disclosed to the borrower?

Which loan strategy would achieve some flexibility; no exposure to credit risk but exposure to repricing risk?   Question 22 options:   A company borrows $1 million for one year at a fixed rate, then renew the credit annually   A company borrows $5 million for five years at a fixed interest rate   A company borrows $5 million for five years at a floating rate, LIBOR + 1%   A company borrows $1 million for one year at LIBOR + 1%, then renew the credit annually

Which of the following statements is most correct? The first payment under a 3-year, annual payment, amortized loan for $1,000 will include a smaller percentage (or fraction) of interest if the interest rate is 5 percent than if it is 10 percent. If you are lending money, then, based on effective interest rates, you should prefer to lend at a 10 percent nominal, or quoted, rate but with semiannual payments, rather than at a 10.1 percent nominal rate with annual payments. However, as a borrower you should prefer the annual payment loan. The value of a perpetuity (say for $100 per year) will approach infinity as the interest rate used to evaluate the perpetuity approaches zero. Statements a, b, and c are all true. Statements b and c are true.

A borrower can obtain an 80% loan with an 8% interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, he could obtain a 90% loan at an 8.5% rate with the same loan term. The borrower plans to own the property for the entire loan term. solve with finanical calucltor  What is the incremental cost of borrowing the additional funds? How would your answer change if 2 points were charged on the 90% loan? Would your answer to part (b) change if the borrower planned to own the property for only 5 years?

Question 5. Attached is a similar question answered

Which 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

A bank has estimated its expected (predicted) loan loss rate on its consumer loans at 3.25%. If the bank wishes to earn 8% on it consumer loans, what rate should it charge its customers?

If money is not an economic resource, why is interest paid and received for its use? What considerations account for the fact that interest rates differ greatly on various types of loans? Use those considerations to explain the relative sizes of the interest rates on the following:a. A 10-year $1000 government bond.b. A $20 pawnshop loan.c. A 30-year mortgage loan on a $145,000 house.d. A 24-month $12,000 commercial bank loan to finance the purchase of an automobile.e. A 60-day $100 loan from a personal finance company.