In which type of loan does the borrower initially receive the present value of the future lump sum loan repayment amount?

Question

Quizplus · Accepted Answer

The borrower initially receives the present value of the future lump sum loan repayment amount in pure discount loans. This means that the loan is issued at a discount, with the borrower receiving less than the total amount to be repaid in the future. The borrower then repays the loan in a single lump sum at maturity, which is equal to the face value of the loan.

In Which Type of Loan Does the Borrower Initially Receive