When Comparing Two Installment Loans with the Same Principal and Annual

question 48

Multiple Choice

When comparing two installment loans with the same principal and annual percentage rate (APR) , the loan with:

• A) the longer maturity will have the lower monthly payment and the higher total costs.
• B) the shorter maturity will have the lower monthly payment and the higher total costs.
• C) the longer maturity will have the higher monthly payment and the higher total costs.
• D) the shorter maturity will have the lower monthly payment and the lower total costs.
• E) the longer maturity will have the higher monthly payment and the lower total costs.

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Definitions:

Six Months Old

Describes something, such as a product, document, or animal, that has existed or has been in use for six months.

Point-of-Sale Systems

Hardware and software systems used at retail and hospitality businesses to process sales transactions.

Charge Account

A type of credit account that requires the full balance to be paid at the end of each billing cycle.

Stop Payment Order

a request made by an account holder to their bank to prevent a check or preauthorized payment from being processed.