Question

Scott borrowed $2,500 today. The loan agreement requires him to repay $2,685 in one lump sum payment one year from now. This type of loan is referred to as a(n)_______________.a. interest-only loan.b. pure discount loan.c. quoted rate loan.d. compound interest loan.e. amortized loan.

Answer 1

Answer: Pure discount loan

Explanation:

The pure discount loan is the easiest and simplest type of loan. In the pure discount loan, the borrower receives the fund today and repays the fund as a single lump sum in the future. An example of pure discount loans are treasury bills.

Since Scott borrowed $2500 and he's expected to pay $2685 at once as a lump sum a year after he borrowed the money, it's a example of pure discount loan.

Answer 2

Answer:

pure discount loan ( B )

Explanation:

A pure discount loan is a type of loan taken out and repaid in lump sum at a specific period usually with a fixed interest revenue added to the principal sum been borrowed. this type of loan is simple but are not a very common type of loan because the lender doesn't really get a good value for his money.

The value of the repaid loan might be affected by economic factors like Inflation and sometimes is might be difficult to repay if given to individuals. an example of a pure discount loan is the treasury bills