Exam 11: Promissory Notes, Simple Discount Notes and the Discount Process

The payee of a promissory note is extending the credit.

The maker of a promissory note issues the note.

The maturity date of a promissory note represents when only the principal is due.

A $120,000, 5%, 200-day note dated June 6 is discounted on October 8. The discount period is:

On March 12, Bill Jones accepted a $12,000 note in granting a time extension of a bill for goods purchased by Ron Prentice. Terms of the note were 13% for 90 days. On April 24, Bill could no longer wait for the money and discounted the note at Able Bank at a discount rate of 14%. The proceeds to Bill is:

If one discounts a non-interest-bearing note, all the following will be used except:

The bank discounts an $8,750 non-interest-bearing simple discount note at 6% for 60 days. What is the discounted amount?

An interest-bearing note can be discounted before the maturity date.

Jill Jones borrowed $18,000 for 180 days from Sovereign Bank. The bank discounts the note at 8%. The effective interest rate to the nearest hundredth percent is:

A promissory note:

The maturity value of a $28,000, 6%, 60-day interest-bearing note on August 6 is:

A Treasury bill must be 13 weeks.

A $25,000, 15%, 80-day note dated November 5 is discounted at National Bank on January 5. The discount period is:

The rate on a promissory note is always stated as a semiannual rate.

The maker of a promissory note:

The principal of a promissory note is the face value.