Gemini Real Estate Is Offered a $2 Million Line of Credit

question 94

Multiple Choice

Gemini Real Estate is offered a $2 million line of credit for four months at an APR of 9%. This loan has a loan origination fee of 1.5%. What is the actual four-month interest rate paid, expressed as an EAR?

• A) 4.57%
• B) 9.68%
• C) 12.44%
• D) 14.34%

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Definitions:

Correlation Coefficient

A statistical index ranging from -1 to 1 that measures the degree of association between two variables.

Greek Symbols

Characters used in mathematics, science, and engineering that originate from the Greek alphabet, often representing constants, variables, and parameters.

Population Estimate

A value derived from a statistical model or sample that approximates the true characteristic of an entire population.

Positive Correlation

Positive correlation indicates that as one variable increases, the other variable tends to increase as well, demonstrating a direct relationship between the two variables.