Which of the Following Statements Is CORRECT

question 30

Multiple Choice

Which of the following statements is CORRECT?

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

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Definitions:

Allocative Efficiency

A state of the economy where resources are distributed in a way that maximizes the net benefit to society, with goods and services going to those who value them the most.

Marginal Cost

The incremental cost incurred when producing one more unit of a good or service. This is a different phrasing for the concept given previously.

Marginal Benefit

The additional satisfaction or utility gained by consuming an extra unit of a good or service, a reiteration with different phrasing.

Patient Protection and Affordable Care Act (PPACA)

A federal law enacted in 2010 aimed at reducing healthcare costs and increasing health insurance coverage among Americans.