You Are Borrowing $1,000 with an APR of 10% and a Loan

question 3

Multiple Choice

You are borrowing $1,000 with an APR of 10% and a loan maturity of 1 year. Total interest charges will be the highest when:

• A)you pay off the loan in 12 monthly installments.
• B)you pay off the loan in 10 monthly installments.
• C)you make one payment in full at the end of the year.
• D)you prepay the loan 6 months prior to the maturity of the loan.
• E)you pay off the loan within 30 days.

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Definitions:

Diode

A semiconductor device that allows current to flow in one direction only, used in electronics for rectification and signaling.

Relay

Any of a number of devices that receives a signal and then effects an action. In vehicle electrical circuits, relays are used to allow a small current circuit to control a large current circuit such as in a starter relay. Also known as a pilot.

Transistor

A semiconductor device used to amplify or switch electronic signals and electrical power, fundamental in modern electronic circuits.