Under the Two-Cycle Average Daily Balance Method for Computing Interest

question 12

Multiple Choice

Under the two-cycle average daily balance method for computing interest,

• A)there is a two-month grace period before any interest is owed on the unpaid balance.
• B)you will always pay more interest than under the one-cycle daily balance method.
• C)consumers who have a permanent unpaid balance will pay more interest than under the one-cycle daily balance method.
• D)a grace period applied in a previous month is eliminated if you fail to completely pay off the balance in the present month.

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Definitions:

Parent's Control

The influence and authority a parent company holds over its subsidiary's operations and financial decisions.

Subsidiaries

Companies controlled by a parent company through the ownership of more than half of their voting stock or through other means of control.

Available-for-Sale Securities

Debt or equity securities not classified as held-to-maturity or trading securities, measured at fair value, with changes in value recorded in other comprehensive income.

Fair Value

An estimate of the price at which an asset would trade in a fair transaction between willing market participants, reflecting its intrinsic value.