On January 1, Pablo Borrows $5,000 with a Fixed Interest

question 55

Multiple Choice

On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's first loan payment on February 1 would be principal?

• A) $189.05.
• B) $190.63.
• C) $225.50.
• D) $250.28.

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Definitions:

Expected Market Return

The average return anticipated from an investment in a broad market index over a certain period.

Expected Return

The anticipated return on an investment based on the probabilities of possible outcomes.

Risk-Free Rate

The expected earnings from an investment that carries no risk of losing money, typically exemplified by the return on government bonds.

Expected Return

The anticipated value or return that an investor predicts to receive from an investment over a period of time.