Which of the Following Statements Is CORRECT,assuming Positive Interest Rates

question 54

Multiple Choice

Which of the following statements is CORRECT,assuming positive interest rates and holding other things constant?

• A) The present value of a 5-year,$250 annuity due will be lower than the PV of a similar ordinary annuity.
• B) A 30-year,$150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage.
• C) A bank loan's nominal interest rate will always be equal to or less than its effective annual rate.
• D) If an investment pays 10% interest,compounded annually,its effective annual rate will be less than 10%.
• E) Banks A and B offer the same nominal annual rate of interest,but A pays interest quarterly and B pays semiannually.Deposits in Bank B will provide the higher future value if you leave your funds on deposit.

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Definitions:

Pubertal Development

The physical changes during adolescence that lead to sexual maturity, including growth spurts and development of secondary sexual characteristics.

Hormones

Chemical messengers that are manufactured by the endocrine glands, travel through the bloodstream, and affect other tissues.

Puberty

A developmental stage where an individual undergoes physical changes leading to sexual maturity and the capability of reproduction.

Role Confusion

Uncertainty about one's place or identity within society or one's personal life.