If You Take Out a Bank Loan Prior to Unanticipated

question 56

Multiple Choice

If you take out a bank loan prior to unanticipated inflation

• A) it will be harder for you to repay the loan because of the inflated dollar.
• B) you will gain at the expense of your bank.
• C) your bank will gain at your expense.
• D) neither you nor your bank will be affected, because the loan was made prior to the inflation.

---

Definitions:

Compounded Quarterly

In this scenario, interest is applied to the initial sum and any accumulated interest every three months.

Future Value

The value of an investment at a specific date in the future, taking into account factors like interest rates and time period.

Compounded Annually

Interest calculation method where the interest is added to the principal sum once a year, resulting in 'interest on interest.'

Present Value

The present valuation of a future financial sum or sequences of cash inflows, based on a specified rate of return.