The Amount the Bank Charges When It Discounts a Note

question 10

Multiple Choice

The amount the bank charges when it discounts a note is calculated as:

• A) bank discount = note principal × bank discount rate × (discount period /360 days).
• B) bank discount = maturity value × bank discount rate × (original note period /360 days).
• C) bank discount = maturity value × bank discount rate + original interest rate × (discount period /360 days).
• D) bank discount = maturity value × bank discount rate × (discount period /360 days).

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Definitions:

Spinout Condition

A scenario in driving where the vehicle loses traction and spins out of control, often due to slippery conditions.

Power Divider

A differential mechanism in heavy trucks that allows for distribution of power between the front and rear axles for improved traction.

Differential Carrier

The housing that contains the differential assembly, facilitating the variation in wheel speed on a vehicle.

Differential Carrier

the housing that contains the differential gear set in a vehicle, allowing for the difference in wheel speed between the driving wheels.