The way the promisory note was written up would explain not only why Kerry lost so much money by early termination, and give a much better estimate of his actual loss.
This puts the lie (again) to his statements to the effect that there were no "real" transactions for him to report to the Senate. This also (again) puts the lie to his statements that this was a total loss for his "initial" investment.
Again, it's been awhile since my Finance days, so some of my terminology will probably not be very precise and may sound strange to someone more conversant in the field. With that said, the promisory note was written in something like the format of a zero coupon bond. The amount given as the "Principal" was not the amount loaned to Kerry, but the amount due at maturity - it was the amount loaned PLUS two years interest.
This explains why Kerry lost his shirt by early termination - the provision governing this option in the contract states that:
"The borrower shall have the right to prepay at any time before maturity the principal of this note" (emphasis added)
So Kerry was on the hook for two years of interest no matter when he repaid the loan. From this if you assume that Kerry was truthful (shaky assumption, on this topic at least) about when he terminated the agreement, he paid 24 months interest on a loan of roughly 4 months duration. Four months of interest on 200,000 at 9% is about $6000. This would make Kerry's loss roughly $32,500.
1. Why take out a loan with, essentially, that same amount of cash as collateral? Why not just use your cash? (It's not like Kerry was trying to build his credit).
2. Given that Kerry says that he didn't declare his loss, I would say that it is highly likely that he didn't declare the interest expense of $6000 either (remember that this transaction was done via the shell of Gin Vest (or Ginvest) so as a business expense both were I would imagine deductible. He could have reduced his loss by around 10,000 in the form of tax savings if he had taken these deductions. Was there more reason to hide this than is indicated by what information is currently available?