When a borrower receives the face amount of a discounted note less discount, this amount is known as:
A) the note proceeds
B) the note discount
C) the note deferred interest
D) the note principal

Question

Quizplus · Accepted Answer

The face amount of a discounted note is the amount of money the borrower promises to repay at maturity. When the lender buys the note at a discount, the borrower receives the face amount less the discount. This resulting amount is known as the note proceeds, which is the actual amount of money the borrower receives and must repay. Therefore, choice A) is the correct answer. Choice B) refers to the amount of money the lender discounts the note for, not the amount received by the borrower. Choice C) and D) are not typically used in this context.

When a Borrower Receives the Face Amount of a Discounted