Use the following information for this and the following three questions.

A bank wishes to earn a pure rate of 2 percent, and the inflation premium is 1.6%. The bank uses the Fair Issac Corporation (FICO) score to determine car loan rate for its customers. Based on an automobile loan applicants FICO score, it uses the following risk premium adjustment to the rate it quotes.

FICO Score	Risk Premium %
>740	1.00%
720-739	1.10%
700-719	1.30%
680-699	1.60%
660-679	1.90%
640-659	2.20%
620-639	2.50%
<620	7.50%

What annual percentage rate will it quote to John Smith who has a FICO score of 645?

If John Smiths FICO score drops to 615, what will be thepercent changein the APR?

Jane Smith applies for a car loan to the bank and the bank quotes her an APR of 4.98 percent. In which range does Jane Smiths FICO score fall?

Answer rating: 100% (QA)

The Answer is in the image, click to view ... View the full answer