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03 Jun 2024, 07:46
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Credit in developing countries can be granted through formal or informal channels. Formal channels include institutions such as banks, credit cooperatives, and government agencies. Loans of this type accrue positive interest and are typically court enforced. Informal credit channels include relatives, friends, community members, moneylenders, rotating savings and credit associations, and informal intermediaries. Loans such as these may or may not accrue positive interest. Loans of either type may be used by the borrower for consumption or investment in a business.
In 1930s rural China, informal credit was sometimes court enforced. However, it was more often self-enforcing, especially in remote areas. With a positive–interest rate loan, the borrower would pay principal and interest. With a zero–interest rate loan, the borrower would repay the principal and provide some non-monetary resource in lieu of interest. For example, the borrower might have supplied land, labor, or draft animal services to the lender.
In 1930s rural China, informal credit was sometimes court enforced. However, it was more often self-enforcing, especially in remote areas. With a positive–interest rate loan, the borrower would pay principal and interest. With a zero–interest rate loan, the borrower would repay the principal and provide some non-monetary resource in lieu of interest. For example, the borrower might have supplied land, labor, or draft animal services to the lender.
Giving up a fixed duration of repayment in exchange for security: No
Giving up interest payments in exchange for security: No
Giving up interest payments in exchange for access to other resources: Yes
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
53% (03:13) correct
47%
(03:35)
wrong
based on 1537
sessions
History
Date
Time
Result
Not Attempted Yet
ID: 100318
According to the information provided, a lender who offered one of the zero–interest rate loans included in the table would accurately be described as making which of the following trade-offs? Select Yes for each option that applies. Otherwise, select No.
According to the information provided, a lender who offered one of the zero–interest rate loans included in the table would accurately be described as making which of the following trade-offs? Select Yes for each option that applies. Otherwise, select No.
| Yes | No | |
| Giving up a fixed duration of repayment in exchange for security | ||
| Giving up interest payments in exchange for security | ||
| Giving up interest payments in exchange for access to other resources |
ShowHide Answer
Official Answer
Giving up a fixed duration of repayment in exchange for security: No
Giving up interest payments in exchange for security: No
Giving up interest payments in exchange for access to other resources: Yes
The village’s mean annual interest rate in 1935 was greater than 45%.: Yes
The lender anticipated that the borrower would be unable to supply land, labor, or draft animal services in the future.: No
The village’s mean annual interest rate in 1935 was less than 20%.: No
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
61% (01:46) correct
39%
(01:51)
wrong
based on 1461
sessions
History
Date
Time
Result
Not Attempted Yet
ID: 100319
If one of the loans in the survey is considered at random, with no prior knowledge of the village in which it was issued, which of the following factors would, if known, increase the probability that the loan is a zero–interest rate loan? Select Yes for each option that applies on the basis of the given information. Otherwise, select No.
If one of the loans in the survey is considered at random, with no prior knowledge of the village in which it was issued, which of the following factors would, if known, increase the probability that the loan is a zero–interest rate loan? Select Yes for each option that applies on the basis of the given information. Otherwise, select No.
| Yes | No | |
| The village’s mean annual interest rate in 1935 was greater than 45%. | ||
| The lender anticipated that the borrower would be unable to supply land, labor, or draft animal services in the future. | ||
| The village’s mean annual interest rate in 1935 was less than 20%. |
ShowHide Answer
Official Answer
The village’s mean annual interest rate in 1935 was greater than 45%.: Yes
The lender anticipated that the borrower would be unable to supply land, labor, or draft animal services in the future.: No
The village’s mean annual interest rate in 1935 was less than 20%.: No
A greater number of zero–interest rate loans than positive–interest rate loans were negotiated.
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
62% (02:03) correct
38%
(02:14)
wrong
based on 1388
sessions
History
Date
Time
Result
Not Attempted Yet
ID: 100320
The information in the table and graph most strongly indicates that which one of the following is true of the loans in the table?
The information in the table and graph most strongly indicates that which one of the following is true of the loans in the table?
| A greater number of zero–interest rate loans were negotiated in the village with the highest average annual interest rate than in the village with the second-highest rate. | |
| A greater number of zero–interest rate loans than positive–interest rate loans were negotiated. | |
| At least one zero–interest rate loan of fixed duration was used for consumption. | |
| In more than half of the villages with average annual interest rates ranging from 20% to 30%, zero–interest rate loans predominated. | |
| Among loans that were not zero–interest rate loans, the majority were issued at interest rates of less than 40%. |
ShowHide Answer
Official Answer
A greater number of zero–interest rate loans than positive–interest rate loans were negotiated.
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04 Jul 2024, 05:43
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The first Tab talks of type of loans and the next two tabs talk of the loans in 21 villages in 1935 in present northeast China.
Q.1 According to the information provided, a lender who offered one of the zero–interest rate loans included in the table would accurately be described as making which of the following trade-offs?
The first Tab gives us a reason of zer0-interest rate loans, and that is 'With a zero–interest rate loan, the borrower would repay the principal and provide some non-monetary resource in lieu of interest'.
Giving up a fixed duration of repayment in exchange for security..NO
Giving up interest payments in exchange for security..NO
Giving up interest payments in exchange for access to other resources..YES
Hence, No, No, Yes.
Q.2. If one of the loans in the survey is considered at random, with no prior knowledge of the village in which it was issued, which of the following factors would, if known, increase the probability that the loan is a zero–interest rate loan?
We have to look at the graph for the answer. Where does the probability on X-axis exceed 50%? It is at mean value(Y-axis) above 25%.
The village’s mean annual interest rate in 1935 was greater than 45%.... We can check that there are only two dots above 45% in Y-axis, and both these dots correspond to more than 80% on X-axis, so YES
The lender anticipated that the borrower would be unable to supply land, labor, or draft animal services in the future....Rather it is the opposite. Zero-interest loan meant that there will be no monetary transaction, and the interest that could be accrued would be compensated by resources mentioned in the option. Hence NO
The village’s mean annual interest rate in 1935 was less than 20%....There is only one dot and that gives the probability as 23%, which is below the majority mark
Hence, Yes, No, No.
Q.3. The information in the table and graph most strongly indicates that which one of the following is true of the loans in the table?
We have to restrict to the table and the table gives us the following to be true.+. 363 zero-interest vs 300 positive interest
A greater number of zero–interest rate loans than positive–interest rate loans were negotiated.
Q.1 According to the information provided, a lender who offered one of the zero–interest rate loans included in the table would accurately be described as making which of the following trade-offs?
The first Tab gives us a reason of zer0-interest rate loans, and that is 'With a zero–interest rate loan, the borrower would repay the principal and provide some non-monetary resource in lieu of interest'.
Giving up a fixed duration of repayment in exchange for security..NO
Giving up interest payments in exchange for security..NO
Giving up interest payments in exchange for access to other resources..YES
Hence, No, No, Yes.
Q.2. If one of the loans in the survey is considered at random, with no prior knowledge of the village in which it was issued, which of the following factors would, if known, increase the probability that the loan is a zero–interest rate loan?
We have to look at the graph for the answer. Where does the probability on X-axis exceed 50%? It is at mean value(Y-axis) above 25%.
The village’s mean annual interest rate in 1935 was greater than 45%.... We can check that there are only two dots above 45% in Y-axis, and both these dots correspond to more than 80% on X-axis, so YES
The lender anticipated that the borrower would be unable to supply land, labor, or draft animal services in the future....Rather it is the opposite. Zero-interest loan meant that there will be no monetary transaction, and the interest that could be accrued would be compensated by resources mentioned in the option. Hence NO
The village’s mean annual interest rate in 1935 was less than 20%....There is only one dot and that gives the probability as 23%, which is below the majority mark
Hence, Yes, No, No.
Q.3. The information in the table and graph most strongly indicates that which one of the following is true of the loans in the table?
We have to restrict to the table and the table gives us the following to be true.+. 363 zero-interest vs 300 positive interest
A greater number of zero–interest rate loans than positive–interest rate loans were negotiated.
General Discussion
marquitatremblay
Joined: 20 Nov 2023
Last visit: 24 Jun 2024
Posts: 6
Location: United States
GMAT 1: 730 Q54 V54
GRE 1: Q166 V162
Updated on: 24 Jun 2024, 02:26
Originally posted by marquitatremblay on 19 Jun 2024, 02:09.
Last edited by marquitatremblay on 24 Jun 2024, 02:26, edited 1 time in total.
Last edited by marquitatremblay on 24 Jun 2024, 02:26, edited 1 time in total.
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Quote:
@geometry dash scratch
Credit in developing countries can be granted through formal or informal channels. Formal channels include institutions such as banks, credit cooperatives, and government agencies. Loans of this type accrue positive interest and are typically court enforced. Informal credit channels include relatives, friends, community members, moneylenders, rotating savings and credit associations, and informal intermediaries. Loans such as these may or may not accrue positive interest. Loans of either type may be used by the borrower for consumption or investment in a business.
In 1930s rural China, informal credit was sometimes court enforced. However, it was more often self-enforcing, especially in remote areas. With a positive–interest rate loan, the borrower would pay principal and interest. With a zero–interest rate loan, the borrower would repay the principal and provide some non-monetary resource in lieu of interest. For example, the borrower might have supplied land, labor, or draft animal services to the lender.
Could you please explain the second statement ?? Credit in developing countries can be granted through formal or informal channels. Formal channels include institutions such as banks, credit cooperatives, and government agencies. Loans of this type accrue positive interest and are typically court enforced. Informal credit channels include relatives, friends, community members, moneylenders, rotating savings and credit associations, and informal intermediaries. Loans such as these may or may not accrue positive interest. Loans of either type may be used by the borrower for consumption or investment in a business.
In 1930s rural China, informal credit was sometimes court enforced. However, it was more often self-enforcing, especially in remote areas. With a positive–interest rate loan, the borrower would pay principal and interest. With a zero–interest rate loan, the borrower would repay the principal and provide some non-monetary resource in lieu of interest. For example, the borrower might have supplied land, labor, or draft animal services to the lender.
