Zoe and Lucius Are Parties to a Contract That Allows

question 3

Multiple Choice

Zoe and Lucius are parties to a contract that allows Zoe to take the benefit of a "prepayment privilege" (as that term was used in the text) . Which of the following statements is most likely TRUE?

• A) The prepayment privilege indicates that Zoe has agreed to sell a piece of land to Lucius and that she is entitled to receive payment even before she transfers title to him.
• B) The prepayment privilege indicates that Lucius borrowed money from Zoe.
• C) The prepayment privilege was intended to allow Zoe to demand repayment of a loan earlier than expected if interest rates decrease.
• D) If Zoe did not enjoy the benefit of a prepayment privilege, she might be liable for a penalty if she tried to repay a loan to Lucius more quickly than initially agreed.
• E) The prepayment privilege was intended to compensate Zoe for the loss of interest on a loan.

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