Exam 17: Promissory Notes, Simple Discount Notes, and the Discount Process

On June 30 Rose Company accepted a 90-day, $12,000 non-interest-bearing note from C Manufacturer. The maturity value of the note for Rose is:

(Multiple Choice)

4.8/5

(40)

Question 41

The maturity value of a non-interest-bearing note is the same as its face value.

(True/False)

4.8/5

(31)

Question 42

Lines of credit provide companies with additional financing that is immediately available to them.

(True/False)

4.8/5

(41)

Question 43

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

(True/False)

4.9/5

(37)

Question 44

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

(Multiple Choice)

4.8/5

(39)

Question 45

The rate on a $1,200, 90 day note that cost $17.75 in interest is:

(Multiple Choice)

4.8/5

(42)

Question 46

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

(Multiple Choice)

4.9/5

(44)

Question 47

Able Co. accepted a $20,000 note on March 10 with terms of 6%, 60 days. Able Co. discounted the note on March 20 at the Green Bank at 7%. Use ordinary interest. What net proceeds did Able receive?

(Short Answer)

4.8/5

(42)

Question 48

On May 7, Ralph Blue accepted a $5,000 note from Dick Shea. Terms of the note were 7% for 180 days. On Aug. 19, Ralph could no longer wait for the money and discounted the note at Tover Bank at a discount rate of 8%. Calculate Ralph's proceeds. Use ordinary interest.

(Short Answer)

4.9/5

(38)

Question 49

Ray Furniture wants to buy a dining room set for $7,000 with a 20% trade discount. Ray needs the cash to pay the bill and is considering discounting a 90-day note dated May 12 with a maturity value of $6,500 at Hunt Bank at a discount rate of 13% on June 5. The bank discount if Ray discounts the note is:

(Multiple Choice)

4.9/5

(35)

Question 50

The payee of a promissory note is extending the credit.

(True/False)

4.9/5

(32)

Question 51

A Treasury bill must be 13 weeks.

(True/False)

4.8/5

(37)

Question 52

A simple discount note results in:

(Multiple Choice)

4.8/5

(43)

Question 53

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?

(Short Answer)

4.8/5

(35)

Question 54

The discount period represents the exact number of days the original lender will have to wait for the note to come due.

(True/False)

4.9/5

(33)

Question 55

The maturity value of an interest-bearing note is:

(Multiple Choice)

4.9/5

(42)

Question 56

The purchase price (or proceeds) of a Treasury bill would be the value of the Treasury bill plus the discount.

(True/False)

4.8/5

(42)

Question 57

A $15,000, 11%, 120-day note dated Sept. 3 is discounted on Nov. 11. Assuming a bank discount rate of 9%, the proceeds would be:

(Multiple Choice)

4.9/5

(33)

Question 58

A simple discount note does not involve a bank discount.

(True/False)

4.8/5

(38)

Question 59

The principal of a promissory note is the face value.

(True/False)

4.9/5

(38)

Question 60

Showing 41 - 60 of 64

On June 30 Rose Company accepted a 90-day, $12,000 non-interest-bearing note from C Manufacturer. The maturity value of the note for Rose is:

The maturity value of a non-interest-bearing note is the same as its face value.

Lines of credit provide companies with additional financing that is immediately available to them.

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

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

The rate on a $1,200, 90 day note that cost $17.75 in interest is:

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

Able Co. accepted a $20,000 note on March 10 with terms of 6%, 60 days. Able Co. discounted the note on March 20 at the Green Bank at 7%. Use ordinary interest. What net proceeds did Able receive?

On May 7, Ralph Blue accepted a $5,000 note from Dick Shea. Terms of the note were 7% for 180 days. On Aug. 19, Ralph could no longer wait for the money and discounted the note at Tover Bank at a discount rate of 8%. Calculate Ralph's proceeds. Use ordinary interest.

The payee of a promissory note is extending the credit.

A Treasury bill must be 13 weeks.

A simple discount note results in:

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?

The discount period represents the exact number of days the original lender will have to wait for the note to come due.

The maturity value of an interest-bearing note is:

The purchase price (or proceeds) of a Treasury bill would be the value of the Treasury bill plus the discount.

A $15,000, 11%, 120-day note dated Sept. 3 is discounted on Nov. 11. Assuming a bank discount rate of 9%, the proceeds would be:

A simple discount note does not involve a bank discount.

The principal of a promissory note is the face value.

Problem Solving With Math

Fractions

Decimals

Solving for the Unknown

Business Statistics

Banking and Budgeting

Payroll and Income Tax

Sales, Excise, and Property Taxes

Risk Management

Installment Buying and Revolving Charge Credit Cards

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

How to Read, Analyze, and Interpret Financial Reports

Depreciation

Inventory and Overhead

Simple Interest

The Cost of Home Ownership

Compound Interest and Present Value

Annuities and Sinking Funds

Stocks, Bonds, and Mutual Funds

Filters