You Obtain a Loan of $3,000 Based on Simple Interest

question 33

Multiple Choice

You obtain a loan of $3,000 based on simple interest with an annual interest rate of 12%, or 1% a month. If the first payment is $300, how much is the principal portion of the payment?

• A) $27
• B) $270
• C) $280
• D) $295

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Definitions:

Balance Sheet

A financial statement that presents a company's assets, liabilities, and equity at a specific point in time.

Cash and Cash Equivalents

Liquid assets that can be quickly turned into exact amounts of cash with very little chance of value variation over the short term.

Treasury Bonds

Long-term government securities issued with a fixed interest rate and maturity date, typically used to finance national debt.

Brokerage Commission

The fee charged by a broker for executing transactions or providing specialized services.