Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%.
• B) The present value of a 3-year, $150 annuity due will exceed the present value of a 3-year, $150 ordinary annuity.
• C) If a loan has a nominal annual rate of 8%, then the effective rate can never be greater than 8%.
• D) If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different.
• E) The proportion of the payment that goes toward interest on a fully amortized loan increases over time.

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Definitions:

Alcohol

A chemical compound, specifically ethanol in the context of beverages, which is consumed and can alter consciousness or behavior.

Fetal Alcohol Spectrum Disorders

The continuum of physical, mental, and behavioral outcomes caused by prenatal exposure to alcohol.

Thalidomide

A drug initially used for morning sickness in the late 1950s and early 1960s, later found to cause birth defects, leading to greater drug regulation and safety measures.

Morning Sickness

A common symptom of early pregnancy, characterized by nausea and vomiting, primarily occurring in the morning.