Question 15. If Tony Jones knows he can get a car loan for up to 5 years at a credit union but decides that he can easily repay the loan in 3 years, and therefore gets a 3-year loan, how is Tony reducing the lender ' s risk?
He is sharing the interest rate risk with his lender.
He is pledging valuable assets that can be seized if the loan is not repaid.
He is repaying the loan over a faster period of time. He is taking a larger stake in the asset he is purchasing. He is obtaining the loan from the credit union.
Question 16. Sarah Russell starts the month with a balance of $ 1,000 on her credit card. On the 10th day of the month, she purchases $ 200 in clothes with her credit card. On the 15th day of the month she makes a payment on her credit card of $ 500. The average daily balance for the month including the new purchase is $ 883. The average daily balance for the month excluding the new purchase is $ 750. Sarah ' s interest rate is 1.5 % for the month. Sarah ' s bank calculates the finance charge on the credit card by using the average daily balance, excluding new purchases. What would Sarah ' s finance charges be for the month?
$ 7.50 $ 13.25 $ 18.00 $ 15.00 $ 11.25