If Your Bank Gives You a $2,000 Loan at 8

Multiple Choice

If your bank gives you a $2,000 loan at 8% per year, but deducts the interest in advance, is 8% the "real" rate of interest that you will pay?

A) Yes.
B) No.The interest rate is actually lower than 8 percent.
C) No.The interest rate is actually higher than 8 percent.
D) There is not enough information to answer this question accurately.