Glencoe Ch 8, Loans

Which of the following is a characteristic of a secured loan?

• It does not require any collateral.

• It requires collateral to be pledged.

• It has a higher interest rate than unsecured loans.

• It is only available to businesses.

Which of the following is an example of an unsecured loan?

• Mortgage

• Auto loan

• Personal loan

• Home equity loan

If a loan has an interest rate of 5% per annum, what would be the interest on a $1,000 loan after one year?

• $50

• $100

• $150

• $200

What is the main advantage of a secured loan over an unsecured loan?

• Higher interest rates

• No need for collateral

• Lower interest rates

• Shorter repayment terms

How does compound interest differ from simple interest in loan calculations?

• Compound interest is calculated only once at the end of the loan term.

• Simple interest is calculated on the initial principal only.

• Compound interest is calculated on the initial principal only.

• Simple interest is calculated on the principal and accumulated interest.

Which type of loan is typically used for purchasing a home?

• Personal loan

• Auto loan

• Mortgage

• Payday loan

What is the effect of a longer loan term on the monthly payment and total interest paid?

• Lower monthly payment, higher total interest

• Higher monthly payment, lower total interest

• Lower monthly payment, lower total interest

• Higher monthly payment, higher total interest

Amit Rajpal takes a loan from Kotak Bank without submitting any collateral, what type of loan is it?

• Secured loan
• Unsecured loan
• Mortgage loan
• Installment loan
• Loan against Property

Downpayment %

• A downpayment is a fixed amount paid upfront.
• A downpayment is only required for rental agreements.
• A downpayment is the total cost of the item.
• A downpayment is typically a percentage of the total purchase price.

promissary note

• A promissory note is a type of loan agreement.
• A promissory note is a legal contract for renting property.
• A promissory note is a written promise to pay a specified amount of money.
• A promissory note is a document used for insurance claims.