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Occasionally working overtime and moonlighting
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?