Frank West Wants to Borrow Money for Three Years to Purchase

question 21

Multiple Choice

Frank West wants to borrow money for three years to purchase a new boat. He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent. By choosing the variable rate loan, Chuck is reducing the lender's risk by:

• A) sharing the interest rate risk.
• B) increasing his monthly payments.
• C) taking a larger stake in the asset he is purchasing.
• D) repaying the loan over a faster period of time.
• E) pledging collateral.

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Definitions:

Sizing Handle

A graphical user interface element that allows users to resize a window, frame, or other screen elements by clicking and dragging.

Reset Graphic

An action or command that restores a visual element or graphic to its default state or settings.

Move Object Button

A graphical user interface control designed to enable users to reposition an object within a document or application screen.

Drag

The action of clicking and holding on an object and moving it to a new location within a digital interface.