Zoe and Lucius Are Parties to a Contract That Allows

question 21

Multiple Choice

Zoe and Lucius are parties to a contract that allows Zoe to take the benefit of a "prepayment privilege" (as that term was used in the text) .Which of the following statements is most likely to be TRUE?

• A)The prepayment privilege indicates that Lucius borrowed money from Zoe.
• B)The prepayment privilege was intended to compensate Zoe for the loss of interest on a loan.
• C)The prepayment privilege was intended to allow Zoe to demand repayment of a loan earlier than expected if interest rates decrease.
• D)Zoe, as a mortgagor, wanted the prepayment privilege, which is the right to repay the loan early without being liable to Lucius for a "bonus," which is a penalty that a lender imposes on a borrower who tries to reduce interest payments by repaying a loan early.
• E)The prepayment privilege indicates that Zoe has agreed to sell a piece of land to Lucius and that she is entitled to receive payment even before she transfers title to him.

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