Which of the Following Statements Is Correct

question 119

Multiple Choice

Which of the following statements is correct?

• A) Simple rates can't be used in present value or future value calculations because they fail to account for compounding effects.
• B) The periodic interest rate can be used directly in calculations as long as the number of payments per year is greater than or equal to the number of compounding periods per year.
• C) In all cases where interest is added or payments are made more frequently than annually,the periodic rate is less than the annual rate.
• D) Generally,the APR is greater than the EAR as a result of compounding effects.
• E) If the compounding period is semiannual then the periodic rate will equal the effective annual rate divided by two.

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