Questions 1 - 10 True or False

_____1. Interest can be an amount of money that is earned, or that has to be paid.

_____2. The nominal interest rate takes into account inflation.

_____3. A promissory note is a legal agreement.

_____4. For an individual to obtain a loan from a bank security is always required.

_____5. If a borrower partially repays a loan a co-signor would not be required to make any payments.

_____6. In a discounted note a borrower would receive less than the face value of the loan amount.

_____7. Simple interest adds the amount earned or owed to the original principal amount.

_____8. In a present value problem we know the know the beginning value.

_____9. If a loan is discounted the effective interest rate would be higher than the real interest rate.

_____10. Treasury bills are short term obligations of the federal government and are primarily sold on a discounted basis.