Mike Deposited $100, 000 in a Bank and Procured a Certificate

question 30

Multiple Choice

Mike deposited $100, 000 in a bank and procured a certificate of deposit on it, payable to himself, and for repayment in 5 years with a 5 percent interest rate.A year after that, Mike borrows $25, 000 from Jill, and gives her a promissory note to repay it in one year.As collateral, Mike gave Jill the certificate of deposit and asked to put in a prepayment clause to which Jill agreed.They mutually agreed that Mike could repay in monthly payments, as mentioned it in the note.
-In which of the following ways will the prepayment clause help Jill?

• A)It helps Jill to shorten the repayment period when she wishes.
• B)It helps Jill acquire the whole amount in one payment incase Mike defaults.
• C)It allows Mike to repay earlier than the stipulated time.
• D)It obligates Mike to pay interest on the money he defaults.

---

Definitions:

Superficial Burn

A burn affecting only the outer layer of skin, causing pain, redness, and swelling, but not blistering.

Classification

The systematic arrangement in groups or categories according to established criteria.

Burn

An injury to flesh caused by heat, chemicals, electricity, radiation, or other external sources.

Alkalines

Substances having a pH greater than 7, often referred to as bases, and can neutralize acids.