You Wish to Deposit $7,000 in an Account at the Shylock

question 17

Multiple Choice

You wish to deposit $7,000 in an account at the Shylock Bank.The bank pays interest at a nominal annual rate of 10% compounded quarterly.What is the effective interest rate offered by Shylock?

• A) 10.38%
• B) 10.00%
• C) 9.65%
• D) 11.21%
• E) 10.47%

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Definitions:

Non-Recourse

Pertaining to a loan or obligation where the lender's recovery, in the event of default, is limited to the collateral securing the loan, with no further claim on the borrower’s assets.

Money Orders

A payment order for a pre-specified amount of money, similar to a check, that is widely used for safe transfers of funds.

Promissory Notes

Written promises to pay a specified sum of money to a named party, under specified conditions.

Uniform Commercial Code

A complete collection of regulations that oversee every commercial activity within the United States.