Luther Industries Is Offered a $1 Million Dollar Loan for Four

question 24

Multiple Choice

Luther Industries is offered a $1 million dollar loan for four months at an APR of 9%.If this loan has an origination fee of 1%,then the effective annual rate (EAR) for this loan is closest to:

• A)12.0%
• B)12.6%
• C)4.1%
• D)13.8%

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Definitions:

Sensitization

The process of becoming more sensitive to a stimulus after exposure; it leads to an amplified response to a preexisting stimulus.

Habituation

The process by which an organism decreases or ceases its responses to a repetitive or prolonged stimulus, indicating a basic form of learning.

Behavioral Contrast

occurs when a change in the conditions of reinforcement for one behavior leads to a change in the rate of responding for another behavior.

Disinhibition

The process by which a suppressed behavior is re-expressed following the removal or reduction of inhibition or restraint.