Which of the Following Statements Is FALSE

question 29

Multiple Choice

Which of the following statements is FALSE?

• A)Because interest rates may be quoted for different time intervals,it is often necessary to adjust the interest rate to a time period that matches that of our cash flows.
• B)The effective annual rate indicates the amount of interest that will be earned at the end of one year.
• C)The annual percentage rate indicates the amount of simple interest earned in one year.
• D)The annual percentage rate indicates the amount of interest including the effect of compounding.

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Definitions:

Fraction Form

Fraction form is a way to represent numbers by showing how many parts of a whole are there, typically written with one number over another, separated by a line.

Proportion

A relationship between two quantities denoting their ratio.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Punch Recipe

A set of instructions for making a large, usually sweet and fruity drink intended to serve multiple people.