Which Statement Is True About the Limit on the Rate

question 46

Multiple Choice

Which statement is true about the limit on the rate of interest that a lender may charge?

• A) Interest rates are strictly regulated on loans to corporations and other businesses.
• B) More than half of the states have no interest rate limits on credit card transactions.
• C) Interest rates on installment loans may not exceed the interest rate cap of other types of loans.
• D) Expenses such as document preparation, inspections and title inspection must be considered in determining the rate of interest allowable under the usury statutes.

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Definitions:

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, which can include interest on bonds, loans, convertible debt, and lines of credit.

Operating Cash Flow

The cash generated from the normal operating activities of a business, reflecting its operational profitability.

Net Income

A company's overall earnings following the deduction of all expenses and taxes from its income.

Sunk Costs

Expenses that have already been incurred and cannot be recovered or altered, and should not affect future business decisions.