Home › UP Board Class 10 › socialscience › c10moneycredit › A village moneylender charging 5% interest PER M…
A village moneylender charging 5% interest PER MONTH on a loan is effectively charging an annual rate of approximately:
A5% per year, the simple equivalent rate
B60% per year (5% multiplied by 12 months)
C12% per year, the bank's typical rate
D18% per year on most loans throughout
Answer & Solution
Correct answer: B. 60% per year (5% multiplied by 12 months)
5% per month compounded over 12 months ≈ 60% per year (simple) or 80% per year (compound). The chapter cites 5%/month = 60%/year as the moneylender norm vs banks at 10-12%/year.
Related questions
The role of the RBI in the formal credit market includes:Self-Help Groups (SHGs) in India are typically formed by:Which of the following is a FORMAL source of credit?The TERMS OF CREDIT for a loan include all of the following EXCEPT:Banks make their profit primarily from:In India, the authority that issues currency notes and coins is the:In a BARTER system, a shoe-maker who needs rice must find a rice-seller who: