Question 1

The calculation of the bank discount when discounting an interest-bearing note uses maturity value.

Accepted Answer

A) True 
 B)False  True

Question 2

The effective rate of a $25,000 non-interest-bearing simple discount 10%, 90-day note is:

Accepted Answer

A)  10.62% 
B)  10.0% 
C)  10.8% 
D)  10.26% 
E)  None of these 
A)  10.62% 
B)  10.0% 
C)  10.8% 
D)  10.26% 
E)  None of these D

Question 3

Jay discounts a 100-day note for $25,000 at 13%. The effective rate of interest to the nearest hundredth percent is:

Accepted Answer

A)  13.48% 
B)  13.49% 
C)  13.02% 
D)  13.03% 
E)  None of these 
A)  13.48% 
B)  13.49% 
C)  13.02% 
D)  13.03% 
E)  None of these B

Question 4

Use ordinary interest:
   
A. $61,400;
B. 45 days
C. $60,555.75

Accepted Answer

The answer of Use ordinary interest:
   
A. $61,400;
B....

Question 5

In discounting an interest-bearing note, the discount period represents:

Accepted Answer

A)  Maturity date 
B)  Date of original note 
C)  Number of days from date of discount to date of maturity 
D)  Number of days from date of original note to date of maturity 
E)  None of these 
A)  Maturity date 
B)  Date of original note 
C)  Number of days from date of discount to date of maturity 
D)  Number of days from date of original note to date of maturity 
E)  None of these

Question 6

Use ordinary interest:
   
A. $93,750
B. 110 days
C. $90,598.96

Accepted Answer

The answer of Use ordinary interest:
   
A. $93,750
B....

Question 7

Bank discount on a simple discount note is based on the amount a borrower receives and not what he or she pays back.

Accepted Answer

A) True 
 B)False

Question 8

Calculate maturity value for the interest-bearing note using ordinary interest:

Accepted Answer

The answer of Calculate maturity value for the interest-bearing note...

Question 9

Calculate maturity value for the interest-bearing note using ordinary interest:

Accepted Answer

The answer of Calculate maturity value for the interest-bearing note...

Question 10

The maturity value of an interest-bearing note is:

Accepted Answer

A)  Principal - interest 
B)  Principal + proceeds 
C)  Principal + interest 
D)  Principal - bank discount 
E)  None of these 
A)  Principal - interest 
B)  Principal + proceeds 
C)  Principal + interest 
D)  Principal - bank discount 
E)  None of these

Question 11

In calculating the bank discount when discounting an interest-bearing note, which one of the following is not used in the calculation?

Accepted Answer

A)  Principal proceeds 
B)  Maturity value 
C)  Bank discount rate 
D)  Discount period 
E)  None of these 
A)  Principal proceeds 
B)  Maturity value 
C)  Bank discount rate 
D)  Discount period 
E)  None of these

Question 12

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

Accepted Answer

A)  $28,276.16 
B)  $28,140 
C)  $28,280 
D)  $22,800 
E)  None of these 
A)  $28,276.16 
B)  $28,140 
C)  $28,280 
D)  $22,800 
E)  None of these

Question 13

A simple discount note results in:

Accepted Answer

A)  Lower interest costs than a simple interest note 
B)  Same interest costs as a simple interest note 
C)  Interest deducted when note is paid back 
D)  Interest deducted in advance 
E)  None of these 
A)  Lower interest costs than a simple interest note 
B)  Same interest costs as a simple interest note 
C)  Interest deducted when note is paid back 
D)  Interest deducted in advance 
E)  None of these

Question 14

On April 12, Dr. Rowan accepted a $10,000, 60-day, 11% note from Bill Moss granting a time extension on a past-due account. Dr. Rowan discounted the note at the bank at 12% on May 13. The bank discount is:

Accepted Answer

A)  $98.44 
B)  $111.94 
C)  $94.48 
D)  $111.49 
E)  None of these 
A)  $98.44 
B)  $111.94 
C)  $94.48 
D)  $111.49 
E)  None of these

Question 15

J. Ryan discounts an 80-day note for $15,000 at 12%. The bank discount is (assume ordinary interest):

Accepted Answer

A)  $14,600 
B)  $15,400 
C)  $400 
D)  $15,000 
E)  None of these 
A)  $14,600 
B)  $15,400 
C)  $400 
D)  $15,000 
E)  None of these

Question 16

Tiffany purchased a $10,000, 13-week Treasury bill that is paying 2.25%. What is the effective rate on this T-bill?

Accepted Answer

A)  2.2% 
B)  2.7% 
C)  2.26% 
D)  2.0% 
E)  None of these 
A)  2.2% 
B)  2.7% 
C)  2.26% 
D)  2.0% 
E)  None of these

Question 17

The maker of a promissory note:

Accepted Answer

A)  Issues the note 
B)  Never borrows the money 
C)  Extends the credit 
D)  Issues the note and extends credit 
E)  None of these 
A)  Issues the note 
B)  Never borrows the money 
C)  Extends the credit 
D)  Issues the note and extends credit 
E)  None of these

Question 18

Mover Co. discounted a $2,000, 60-day note dated June 4 at Gloria Bank on June 20, at a discount rate of 9%. Use ordinary interest. How much did Mover Co. receive?

Accepted Answer

The answer of Mover Co. discounted a $2,000, 60-day note...

Question 19

On July 18, Aui Lester accepted a $15,000, 7 3/4%, 180-day note from Ryan O'Flynn. On October 5, Aui discounted the note at Brome Bank at 8 1/4%. What proceeds did Aui receive? Use ordinary interest.

Accepted Answer

The answer of On July 18, Aui Lester accepted a...

Question 20

Banks can never deduct interest in advance on a loan.

Accepted Answer

A) True 
 B)False

The calculation of the bank discount when discounting an interest-bearing note uses maturity value.

The effective rate of a $25,000 non-interest-bearing simple discount 10%, 90-day note is:

Jay discounts a 100-day note for $25,000 at 13%. The effective rate of interest to the nearest hundredth percent is:

Use ordinary interest: A. $61,400; B. 45 days C. $60,555.75

In discounting an interest-bearing note, the discount period represents:

Use ordinary interest: A. $93,750 B. 110 days C. $90,598.96

Bank discount on a simple discount note is based on the amount a borrower receives and not what he or she pays back.

Calculate maturity value for the interest-bearing note using ordinary interest:

Calculate maturity value for the interest-bearing note using ordinary interest:

The maturity value of an interest-bearing note is:

In calculating the bank discount when discounting an interest-bearing note, which one of the following is not used in the calculation?

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

A simple discount note results in:

On April 12, Dr. Rowan accepted a $10,000, 60-day, 11% note from Bill Moss granting a time extension on a past-due account. Dr. Rowan discounted the note at the bank at 12% on May 13. The bank discount is:

J. Ryan discounts an 80-day note for $15,000 at 12%. The bank discount is (assume ordinary interest):

Tiffany purchased a $10,000, 13-week Treasury bill that is paying 2.25%. What is the effective rate on this T-bill?

The maker of a promissory note:

Mover Co. discounted a $2,000, 60-day note dated June 4 at Gloria Bank on June 20, at a discount rate of 9%. Use ordinary interest. How much did Mover Co. receive?

On July 18, Aui Lester accepted a $15,000, 7 3/4%, 180-day note from Ryan O'Flynn. On October 5, Aui discounted the note at Brome Bank at 8 1/4%. What proceeds did Aui receive? Use ordinary interest.

Banks can never deduct interest in advance on a loan.

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Filters

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

The calculation of the bank discount when discounting an interest-bearing note uses maturity value.

The effective rate of a $25,000 non-interest-bearing simple discount 10%, 90-day note is:

Jay discounts a 100-day note for $25,000 at 13%. The effective rate of interest to the nearest hundredth percent is:

Use ordinary interest: A. $61,400; B. 45 days C. $60,555.75

In discounting an interest-bearing note, the discount period represents:

Use ordinary interest: A. $93,750 B. 110 days C. $90,598.96

Bank discount on a simple discount note is based on the amount a borrower receives and not what he or she pays back.

Calculate maturity value for the interest-bearing note using ordinary interest:

Calculate maturity value for the interest-bearing note using ordinary interest:

The maturity value of an interest-bearing note is:

In calculating the bank discount when discounting an interest-bearing note, which one of the following is not used in the calculation?

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

A simple discount note results in:

On April 12, Dr. Rowan accepted a $10,000, 60-day, 11% note from Bill Moss granting a time extension on a past-due account. Dr. Rowan discounted the note at the bank at 12% on May 13. The bank discount is:

J. Ryan discounts an 80-day note for $15,000 at 12%. The bank discount is (assume ordinary interest):

Tiffany purchased a $10,000, 13-week Treasury bill that is paying 2.25%. What is the effective rate on this T-bill?

The maker of a promissory note:

Mover Co. discounted a $2,000, 60-day note dated June 4 at Gloria Bank on June 20, at a discount rate of 9%. Use ordinary interest. How much did Mover Co. receive?

On July 18, Aui Lester accepted a $15,000, 7 3/4%, 180-day note from Ryan O'Flynn. On October 5, Aui discounted the note at Brome Bank at 8 1/4%. What proceeds did Aui receive? Use ordinary interest.

Banks can never deduct interest in advance on a loan.

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Filters