Answered

Ace Bank makes a loan at 2.31% interest plus 4 points. What will their yield be on this loan?

A. 2.81%
B. 6.31%
C. 1.81%
D. 3.81%



Answer :

To find the yield on the loan made by Ace Bank, you need to combine the given interest rate with the additional points. Here's a step-by-step breakdown of how you can determine the yield:

1. Identify the interest rate for the loan. In this case, the interest rate is 2.31%.

2. Identify the additional points associated with the loan, which is 4 points.

3. Add the interest rate and the points together to get the total yield.
[tex]\[ \text{Yield Rate} = \text{Interest Rate} + \text{Points} \][/tex]
Substituting the given values:
[tex]\[ \text{Yield Rate} = 2.31\% + 4 \][/tex]

4. Perform the calculation to get the yield rate:
[tex]\[ \text{Yield Rate} = 6.31\% \][/tex]

Hence, the yield on the loan made by Ace Bank will be 6.31%.

Therefore, out of the given options, the correct answer is:
[tex]\[ \boxed{6.31\%} \][/tex]