1. The annual interest rate divided by the number of days in a year is the perio

Question

1. The annual interest rate divided by the number of days in a year is the periodic rate. True/False

2. The usury rate is a benchmark rate used to guide changes on varaible-rate programs. T/F

3. Credit life insurance generally will pay off the balance due on a loan if an insured borrower dies. T/F

4. Fixed -rate loan portfolios expose lenders to higher interest-rate risk. T/F

5. In general, risk increases as the term of the loan decreases. T/F

6. The annual percentage rate is an interest rate similar to an index rate. T/F

7. Loans charged to loss represent an expense because they are assets that the bank may not recover. T/F

8. The interest rate on a variable rate loan varies depending on market conditions and the terms of the contract. T/F

Explanation / Answer

1)

True.

Periodinc interest rate is defined as the annual rate which is divided by the period of the compounding.

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