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3 years ago

9

Why might a bank offer to make a loan to a customer at a low initial rate that will increase after a set period of time?

2 answers:

erica [24]3 years ago

3 0

To make the loan look more attractive and competitive now

marysya [2.9K]3 years ago

3 0

Why might a bank offer to make a loan to a customer at a low initial rate that will increase after a set period of time?

To make the loan look more attractive and competitive now.

When you apply for a loan, it's important to look at the terms and conditions. Just because the interest is low at the beginning, if not paid off quicker than the full term, it may go up increasing the amount being paid in interest over principle. When a bank offers a low initial interest rate, it's very attractive for a consumer who really needs to the loan to take it almost forgetting or being blind to the fact it will increase astronomically and basically even out to a set rate that's higher from the beginning.

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Art [367]

Answer:

The answer is "Option a".

Explanation:

In this question, each year Barb pays back the interest received. It will add depth to its principle during the first year. In this, the actual case, the interest for $3000 at 5% for the first year = $150, would be added to $3 000, and $31,50. In the second year, Barb should gain a 5% interest on $3150. Throughout the case of Andy, the second principle will be $3000 like it was at the end of the first year. Thus, Barb's second year is going to have more interest.

In choice b, It is wrong because Andy wants to withdraw its interest, this won't get irritated. He would also receive less interest per year than Barb.
In choice c, Its interest would not be the same for both in the first year.
In choice d, It is wrong because Andy wants to withdraw interest each year, no compound interest will arise.
In choice e, No, not that. Andy won't earn the interest compounded so, the Barb will receive the interest multiplied. Therefore, for the five-year duration, Barb can earn more interest.

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Answer:

A. Flexible is the correct answer.

Explanation:

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The bonds issued by Stainless Tubs bear an 8 percent coupon, payable semiannually. The bonds mature in 11 years and have a $1,00

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Answer:

8.69%

Explanation:

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Coupon rate=8.00%

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Number of compounding periods till maturity (N) 22

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Answer:

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$43.13

Explanation:

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= $3.45/(0.13 - 0.05)

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