If Creditors Give You No Credit for Payments Made During

question 24

Multiple Choice

If creditors give you no credit for payments made during the billing period,this is called the:

• A)APR method.
• B)discount method.
• C)previous balance method.
• D)adjusted balance methoD.
• E)average daily balance method.

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Definitions:

Compound Interest

The interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Present Value

The assessed current value of a future monetary amount or series of financial flows, at a given rate of return.

Compound Interest

Refers to the addition of interest to the principal sum of a loan or deposit, where the added interest also earns interest from then on. This effect makes a sum grow at a faster rate compared to simple interest, which is calculated only on the principal amount.

Present Value

The current value of a future cash amount or ongoing cash flows, when calculated with a specific return rate.