Question

Which loan type requires the borrower to repay a single lump sum payment at some time...

Which loan type requires the borrower to repay a single lump sum payment at some time in the future with interest?

Interest-only

Monthly Amortized

Annual Amortized

Future Payment

Pure Discount

The correct answer is Pure Discount

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Answer #1

The Answer is Pure Discount Loan

Pure discount loans are the loans that are repayable in single lumpsum payment at some time in future, The borrower receives the amount of money and the interest and principal gets accumulated and it is payable at the time of maturity. They are not required to make any payments before that period.

The Perfect Example of Pure discount loan is Treasury Bills which are issued at discount and the interest gets accumulated to redeemable at par value or face value.

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