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Ethics & Fraudeasy18% of exam

During intake, an ad shows an interest rate but omits the APR presentation. What is the best compliant response?

Correct Answer

C) State the rate as an annual percentage rate

Lines 261-265 and 273-277; 12 CFR 1026.24(c). Closed-end credit advertising rules require the finance charge rate to be stated as an annual percentage rate. Therefore, the correct response is "State the rate as an annual percentage rate".

Answer Options
A
Proceed based only on borrower preference and document the file later.
B
Rely on sales practice rather than required verification, disclosure, or documentation.
C
State the rate as an annual percentage rate
D
Use a manager exception instead of the required federal mortgage rule.

Why This Is the Correct Answer

Lines 261-265 and 273-277; 12 CFR 1026.24(c). Closed-end credit advertising rules require the finance charge rate to be stated as an annual percentage rate. Therefore, the correct response is "State the rate as an annual percentage rate".

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