To determine the effective cost of a loan, the borrower needs to know
A) the use of the proceeds
B) the prime rate
C) the length (or term) on the loan
D) the margin requirement

Question

To determine the effective cost of a loan, the borrower needs to know​
A) the use of the proceeds​
B) ​the prime rate
C) ​the length (or term) on the loan
D) ​the margin requirement

Quizplus · Accepted Answer

The effective cost of a loan is determined by considering the interest rate, fees, and other charges over the entire term of the loan. Therefore, the length or term of the loan is a crucial factor in determining the effective cost. The use of proceeds, prime rate, and margin requirement may also impact the cost of the loan, but they are not the only factors to be considered.

To Determine the Effective Cost of a Loan, the Borrower