What Would Be the Interest Rate on a Loan of $9,981.78

question 10

Multiple Choice

What would be the interest rate on a loan of $9,981.78 that you paid off with annual payments of $2,500 for each of the next five years?

• A)8.0%
• B)10%
• C)15%
• D)21%
• E)26%

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Definitions:

Insurance

A financial product sold by insurance companies to safeguard the purchaser against the risk of loss, damage, or liability.

Premiums

Regular payments made to an insurance company in exchange for coverage, or the additional cost paid for products or services perceived as offering greater value.

Adverse Selection

A scenario in economics where buyers and sellers have access to different information, leading to transactions where the seller is likely to sell goods of lower quality.

Moral Hazard

The risk that a party insulated from risk may behave differently than if they were fully exposed to the risk.