Multiple Choice
Which of the following statements is CORRECT, assuming positive interest rates and holding other things constant?
A) banks a and b offer the same nominal annual rate of interest, but a pays interest quarterly and b pays semiannually. deposits in bank b will provide the higher future value if you leave your funds on deposit.
B) the present value of a 5-year, $250 annuity due will be lower than the pv of a similar ordinary annuity.
C) a 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage.
D) a bank loan's nominal interest rate will always be equal to or greater than its effective annual rate.
E) if an investment pays 10% interest, compounded quarterly, its effective annual rate will be greater than 10%.
Correct Answer:
Verified
Correct Answer:
Verified
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