A friend asks to borrow $55 from you and in return will pay you $58 in one year. If your bank is offering a 6% interest rate on deposits and loans:
a. How much would you have in one year if you deposited the $55 instead?
b. How much money could you borrow today if you pay the bank $58 in one year?
c. Should you loan the money to your friend or deposit it in the bank?
Answer:
a) 58.30
b) 54.72
c) Deposit
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How does surety differ from casualty?
a. Casualty covers legal expenses of the insured and surety does not b. There are three parties to surety, the principal, obligee and guarantor c. Casualty covers the named insured and surety covers the obligee in case the principal under the bond defaults d. All of the responses are correct
In order to buy new office equipment Allen borrowed $150,000 from a local bank. As security for the debt, the bank took a mortgage (lien) on the equipment. At a time when the amount of the debt was $125,000 Allen defaulted, and the bank repossessed the equipment. The debtor was notified that the property would be sold at a public auction, but did not bother to attend the auction. The net proceeds resulting from the repossession and auction (ie, after all expenses were paid) was $100,000. Which of the following is correct?
A. The auction was invalid since the highest bid was less than the amount of the debt B. The buyer of the equipment at the auction is responsible to Allen for $25,000 C. The sale of the equipment, as it was made in good faith, fully satisfies Allen’s obligation to the bank D. The bank can get a deficiency judgment against Allen for the $25,000 remaining on the debt. E. The buyer of the equipment must return the property (receiving back the amount he paid at auction)