Lillian Loaned A

question 37

Multiple Choice

Lillian loaned A.J. $10,000 and increased her purchasing power by $200 when A.J. repaid the loan a year later. Deflation of 2% also occurred that year. What nominal interest rate did Lillian charge A.J.?

• A) 0%
• B) 2%
• C) 4%
• D) 2.5%

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Definitions:

Cheque

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or a named party.

Invoice

A document sent by a seller to a buyer, outlining the goods or services provided, their prices, and the total amount owed.

EOM

End of Month, referring to any activity, measurement, or payment scheduled to occur on the last day of a month.

Outstanding Balance

The total amount of money owed on a loan, credit card, or mortgage that is yet to be paid.