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| 1 | |
Promissory notes require the borrower to sign. |
| | A) | True |
| | B) | False |
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| 2 | |
The face value is never the original amount. |
| | A) | True |
| | B) | False |
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| 3 | |
The maker of a note is borrowing the money. |
| | A) | True |
| | B) | False |
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| 4 | |
Effective rates can never be calculated on Treasury Bills |
| | A) | True |
| | B) | False |
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| 5 | |
Contingent liability could result from discounting a note |
| | A) | True |
| | B) | False |
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| 6 | |
Step one in discounting a note: |
| | A) | Find proceed |
| | B) | Find discount |
| | C) | Calculate interest and maturity value |
| | D) | Calculate bank discount |
| | E) | None of the above |
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| 7 | |
To calculate the proceeds from discounting a note, it would: |
| | A) | Require subtracting bank discount from original principal |
| | B) | Require adding bank discount to maturity value |
| | C) | Only be done once a year |
| | D) | Require subtracting bank discount from maturity value |
| | E) | None of the above |
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| 8 | |
The proceeds of a $30,000 non-interest-bearing simple discount 7 percent, 90 day note is: |
| | A) | $29,525 |
| | B) | $29,475 |
| | C) | $29,745 |
| | D) | $29,552 |
| | E) | None of the above |
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| 9 | |
When discounting an interest-bearing note the bank discount calculation would not need to know the following: |
| | A) | The maturity date |
| | B) | Date of original note |
| | C) | How many other notes will be due next year |
| | D) | Bank discount rate |
| | E) | None of the above |
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| 10 | |
Treasury Bills: |
| | A) | Are short-term loans |
| | B) | Have no stated rate |
| | C) | Are sol only once a year |
| | D) | Cannot be discounted |
| | E) | None of the above |
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| 11 | |
A $40,000 8 percent 90-day note, dated November 10 is discounted at National Bank on January 3. The discount period is: |
| | A) | 54 days |
| | B) | 36 days |
| | C) | 51 days |
| | D) | 311 days |
| | E) | None of the above |
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| 12 | |
Sam Socy discounts a 90-day note for $14,000 at 6 percent. The bank discount is (Assume ordinary interest) |
| | A) | $14,210 |
| | B) | $13,790 |
| | C) | $210 |
| | D) | $14,000 |
| | E) | None of the above |
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| 13 | |
Daniel discounts a 90-day note for $30,000 at 5 percent. The effective rate of interest to the nearest hundredth percent is: |
| | A) | 5.60 percent |
| | B) | 5.06 percent |
| | C) | 5.12 percent |
| | D) | 5.21 percent |
| | E) | None of the above |
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| 14 | |
Lester Furniture wants to buy a dining room for $8,000 with a 30 percent trade discount. Lester needs the cash to pay the bill and is considering discounting a 120-day note dated May 14 with a maturity value of $7,000 at Hunt Bank at a discount rate of 8 percent on June 12. The bank discount rate if Lester discounts the note is: |
| | A) | $114.65 |
| | B) | $141.65 |
| | C) | $141.56 |
| | D) | $241.65 |
| | E) | None of the above |
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| 15 | |
Aster Corporation accepted a $20,000, 9 percent 120-day note dated August 25 from Lee Company in settlement of a past bill. On October 25 Aster Corporation decided to discount the note at a discount of 8 percent. The proceeds to Aster Corporation is: |
| | A) | $265.51 |
| | B) | $1,265.51 |
| | C) | $23,034.49 |
| | D) | 20,329.91 |
| | E) | None of the above |
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