A Promissory Note with a Maturity Value of $20,000 Is

question 72

Multiple Choice

A promissory note with a maturity value of $20,000 is sold to a bank 32-months before maturity.The bank discounts the note using j₂ =16%.What are the proceeds,if the practical method is used?

• A)$13,275.57
• B)$13,258.11
• C)$13,266.92
• D)$12,939.48

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Definitions:

Co-Insurance Clause

A provision in an insurance policy that requires the policyholder to bear a portion of the risk by paying a percentage of the total claim amount.

Insurance Company

A financial institution that provides a wide range of insurance policies to protect individuals and businesses against potential loss.

Responsibility for Loss

The obligation to bear the financial or material loss suffered due to specific actions, negligence, or unforeseen events.

Premium

The amount paid for an insurance policy or the additional amount above the nominal value of a security or investment.