When the original amount borrowed differs from the amount repaid, the note has:
A)an explicit interest rate.
B)no interest rate.
C)a specified interest rate.
D)an implicit interest rate.

Question

Quizplus · Accepted Answer

An implicit interest rate is present when there is a difference between the original amount borrowed and the amount repaid. This is because the borrower is effectively paying interest on the difference between the two amounts, even if there is no explicit interest rate stated in the loan agreement.

When the Original Amount Borrowed Differs from the Amount Repaid