Self-study
MetroBank made loans to ten small companies, in amounts ranging from $1,000 to $100,000. █████ ███ █████ ███ ███ █████████ ███████ ██████ █████ ███ █████████ ███████ ████ ███████ █████████ ████████ ████ █████ ████ ███ █████████ ████ ██ ███ █████ ████████████ ███ ███████ ███████ ████████ ██ █████████ ███ █████ ███ █████ ███ █████████ ██ ███ ███ ██ ███ █████████ █████
"Surprising" Phenomenon
MetroBank offered loans with increasing monthly payments over five years, yet average monthly loan payments to MetroBank had decreased by the end of the five-year term.
Objective
The correct answer will be a hypothesis explaining how average monthly payments actually decreased by the end of the five-year term, despite the graduated payment plan. Because we're concerned with the average of the ten companies' payments, the explanation could involve all of the companies or just a few.
3.
Which one of the following, ██ █████ ████ █████ ██ ███████ ███ ████████ ███████████ ██ ███ ██████████ ██████
a
The number of █████ █████████ █████████ ███ █████ ████ █████████ █████████ ████ ███ █████████ █████
We’re talking about the ten companies in question. It doesn’t matter how MetroBank handled other companies.
b
Several of the ███ █████ █████████ ████ ████████ █████ ████ █████ ██████
It doesn’t matter where else the small companies get their money from. We need to know why the average payment to MetroBank specifically ended up decreasing.
c
Most banks offer █ ███████ ██████ ██ █████ ███ █████ ████████ ████ ███ ████ █████████
Our concern is just with the repayment of these ten loans offered by MetroBank. Other banks don’t factor into our problem.
d
Of the ten █████ ██████████ ███ █████ ████ ███ ████████ ███ ███████ ███████ ████ ███ █████ █████ ██████ █████ ██████
By the end of the five-year term, only seven companies were still paying off their loans. Their loan payments were still increasing, but since the bigger borrowers were already out of the picture, MetroBank received a lower average payment. This explains the confusion.
e
For some loans ████ ██ ██████████ ███ ███████ ███████ █████████ ████████ ████ ███ ████ ██ ███ █████
According to the stimulus, the loans issued to small companies all had graduated payment plans, meaning the monthly payments were increasing. The terms of other loans are irrelevant to us.