Which One of the Following Is Correct Concerning the Annual

question 91

Multiple Choice

Which one of the following is correct concerning the annual percentage rate (APR) ?

• A) The APR is greater than the effective annual rate.
• B) The APR formula for rate disclosure is [1 + (r/m)]^m-1.
• C) The APR is the rate which lenders are required to disclose.
• D) The APR is best used to compare offers from various lenders.
• E) The APR considers all the effects of compounding.

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Definitions:

Marginal Product (MP)

The extra output generated from increasing the quantity of a particular input by one, while keeping other inputs unchanged.

Price (P)

The cost necessary to acquire a good or service.

Value of the Marginal Product

The additional revenue generated by employing one more unit of a factor, such as labor or capital, in the production process.

Factor's Price

The payment for the use of a factor of production, such as wages for labor, rent for land, or interest on capital.