You Want to Borrow $1,000 from a Friend for One

question 108

Multiple Choice

You want to borrow $1,000 from a friend for one year,and you propose to pay her $1,120 at the end of the year.She agrees to lend you the $1,000,but she wants you to pay her $10 of interest at the end of each of the first 11 months plus $1,010 at the end of the 12th month.How much higher is the effective annual rate under your friend's proposal than under your proposal?

• A) 0.00%
• B) 0.45%
• C) 0.68%
• D) 0.89%
• E) 1.00%

---

Definitions:

Managers

Individuals in charge of directing and overseeing the activities of a group or organization to achieve specific objectives.

Union Organizing Campaign

A coordinated effort aimed at convincing workers to join or form a union to negotiate collectively with their employer.

Organizations

Groups of people who work together in an organized way for a shared purpose.

Wagner Act

A foundational statute in United States labor law which guarantees basic rights of private sector employees to organize into trade unions, engage in collective bargaining, and take collective action such as strikes.