Question

What is the term for the sale of a promissory note before maturity at a price less than the outstanding principal balance at the time of sale and also refers to an amount deducted in advance by a lender from the nominal principal of a loan as part of the borrower's cost of obtaining the loan?

A. Amortization
B. Origination fee
C. Discount point
D. Prepayment penalty

Answer 1

The term for the sale of a promissory note before maturity at a price less than the outstanding principal balance at the time of sale is a discount point.

Step-by-step explanation:

The term for the sale of a promissory note before maturity at a price less than the outstanding principal balance at the time of sale is called a discount point. It is an amount deducted in advance by a lender from the nominal principal of a loan as part of the borrower's cost of obtaining the loan.