--%>

What will happen when a bank gives discount interest on loan

What will happen when a bank gives discount interest on a loan?

E

Expert

Verified

When a bank charges discount interest on a loan the required interest payment is subtracted from the loan proceeds at the time the loan is made.  This makes the effective interest rate greater than the stated rate.

   Related Questions in Financial Management

  • Q : Describe the concept of the world beta

    Describe the concept of the world beta of a security.The world beta measures the sensitivity of returns to security to returns to the world market portfolio. This is a measure of the systematic risk of the security in global setting. Statistically, the world beta can be des

  • Q : Describe importance of international

    Describe importance of study international financial management?Now we are living in a world where all the major economic functions, that means consumption, production, and investment, are highly globalized.  Thus it is essential for financ

  • Q : Trading at small figure bid-ask of 35-40

    A CD/$ bank trader is at present quoting a small figure bid-ask of 35-40, while the rest of the market is trading at CD1.3436-CD1.3441. What is implied regarding the trader's beliefs by his prices?The trader have to think the Canadian dollar wi

  • Q : Difference between financial risk and

    Explain in brief the difference between financial risk and business risk?

  • Q : International finance factor

    factor responsible for surging the international investment portfolio

  • Q : Foremost causes for Japan current

    On the contrary to the U.S., Japan has felt continuous current account surpluses. What could be the foremost causes for these surpluses? Is it desirable to have continuous current account surpluses? Japan's continu

  • Q : Explain what is a Monte Carlo method

    Explain what is a Monte Carlo method?

  • Q : Describe official reserve assets and

    Describe official reserve assets & its major components.Official reserve assets are those financial assets which can be utilized as international means of payments. At present, official reserve assets comprise: (I) gold, (ii) foreign exchang

  • Q : What is calibration in

    What is calibration in valuation/pricing process?

  • Q : Evaluation the firm risk of a capital

    Give explanation on how to evaluate the firm risk of a capital budgeting project.