Which One of the Following Statements Concerning the Annual Percentage

Multiple Choice

Which one of the following statements concerning the annual percentage rate is correct?

A) The annual percentage rate considers interest on interest.
B) The rate of interest you actually pay on a loan is called the annual percentage rate.
C) The effective annual rate is lower than the annual percentage rate when an interest rate is compounded quarterly.
D) When firms advertise the annual percentage rate they are violating U.S. truth-in-lending laws.
E) The annual percentage rate equals the effective annual rate when the rate on an account is designated as simple interest.