Which of These Estimates Should Be the Most Accurate

question 64

Multiple Choice

Which of these estimates should be the most accurate?

• A)parametric
• B)definitive
• C)comparative
• D)order of magnitude

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Definitions:

Amortized Loan

A loan with scheduled periodic payments that consist of both principal and interest, designed to pay off the debt by the end of the term.

Effective Rate

The actual interest rate earned or paid on an investment, loan, or other financial product, accounting for the effect of compounding.

Amortization Schedule

A table detailing each periodic payment on an amortizing loan, including the portion of the payment that goes toward principal and interest over the loan term.

Effective Rate

The actual interest rate on an investment or loan, taking into account the compounding of interest, as opposed to the nominal rate.