If the Discount Method Is Used to Calculate a Finance

question 120

True/False

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be disbursed to the borrower is $2,400.

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Definitions:

Yield to Maturity

The total return anticipated on a bond if it is held until the date it matures.

Premium

An amount paid that is above the standard or nominal cost, often for insurance, superior goods, or to designate a higher level of service or coverage.

Coupon Rate

The interest rate stated on a bond when issued, which represents the amount of interest paid to bondholders annually.

Interest Rates

The percentage of a sum of money charged for its use, determining the cost of borrowing or the return on savings.