Question7 A credit foncier loan has: periodic interest payments and principal repaid at maturity periodic interest and principal repayments when cash flows from a project begins to appear periodic interest payments with a service fee payable at inception periodic interest and principal repayments when the company decides to repay periodic equal repayments of interest and principal throughout the term ResetMaximum marks: 1 Flag question undefined

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BlackTom AI · Accepted Answer

The question asks about the characteristics of a credit foncier loan. We'll evaluate each option against how credit foncier loans typically operate.
Option 1: 'periodic interest payments and principal repaid at maturity' — This describes a bullet loan where interest is paid periodically but the principal is repaid only at the end. That is not the standard structure for a credit foncier loan, which generally involves ongoing principal repayments, so this option is inaccurate.
Option 2: 'periodic interest and principal repayments when cash flows from a project begins to appear' — This implies repayments are contingent on project cash flows materializing, which is not how a credit foncier loan is structured. Such loans usually have scheduled amortization, not contingent payments based on project cash flows, making this option incorrect.
Option 3: 'periodic interest payments with a service fee payable at inception' — Here, the loan would require ongoing interest payments plus a fee paid upfront. This does not reflect the typical amortizing pattern of both interest and principal over time, so it is not the correct description.
Option 4: 'periodic interest and principal repayments when the company decides to repay' — This suggests discretionary repayment timing, lacking a fixed schedule. Credit foncier loans normally follow a defined amortization schedule, so this option is inaccurate.
Option 5: 'periodic equal repayments of interest and principal throughout the term' — This matches the standard amortizing structure: each period features the same total payment, consisting of both interest and principal, leading to equal periodic payments over the term. This aligns with typical credit foncier loan characteristics, making it the correct choice.

In summary, the key distinguishing feature is the uniform, periodic amortization where each payment covers interest and an equal portion of principal, spread evenly across the loan term. The other options describe structures that either defer principal, depend on project cash flows, incur upfront fees with ongoing interest, or allow discretionary repayment, none of which reflect the standard credit foncier amortization pattern.

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