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- 1. True or false. Rate of return is the interest earned on the unpaid balance of an amportized loan1. Explain how an installment loan differs from revolving credit in terms of risk and the nature of the return to the lender.Amortized loans with equal principal repayments will result in less interest being paid over the life of a loan than alternative types of amortized loans. True or False
- 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?Why might the market value of a loan differ from its outstanding balance?There is a formula that will find the APR, i, of a single payment loan but not for a series of payments loan. False or True
- .... Give and explain the factors that affect the interest rate on the loan?What is the difference between a line of credit and a short-term loan?What is the indifference point under the net present value? When would there be a discount on a loan? How about a premium? Explain the purpose of the net present value.
- Explain Negative Amortization Loans with example?The advantage of a "balloon payment" loan over a conventional loan repayment plan is: A. less total interest is paid B. the size of the payments is flexible C. the payments are smaller, except for the final one D. the interest rate is flexibleWhat is the difference between a credit sale (with a higher price as compared to the cash sale) and an interest based loan transaction? Explain it with an example.