Using a 360-Day Year,the Maturity Value of a 90-Day Note

question 27

Multiple Choice

Using a 360-day year,the maturity value of a 90-day note for $3,500 at 8% annual interest is:

• A)$3,780.
• B)$3,710.
• C)$3,570.
• D)$3,500.

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Definitions:

Moral Hazard

A situation in economic theory where one party is willing to take more risks because the negative consequences of the risk will be borne by another party.

Moral Hazard

A situation where one party is more likely to take risks because another party bears the consequences of those risks.

Specific Purpose

A clearly defined and precise goal or objective that a project, action, or entity aims to achieve.

Market Signaling

Actions taken by buyers and sellers to communicate quality in a world of uncertainty.