Use the Following Information for Questions

question 34

Multiple Choice

Use the following information for questions
A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments.
-If the loan is a discount loan, what are the net proceeds of the loan?

• A) $2,200
• B) $2,100
• C) $2,000
• D) $1,800
• E) Cannot be determined

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Definitions:

Market Risk

The risk of losses in investments due to factors that affect the entire market or economy.

CAPM (Capital Asset Pricing Model)

A financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Market Risk

The risk of losses in investments caused by factors that affect the entire market, such as economic recession or political instability.

Treasury Bonds

Long-term government bonds issued by the Treasury Department with maturity periods typically longer than 10 years.