Which of the Following Statements Is CORRECT

question 64

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 ordinary annuity will exceed the present value of a 3-year, $150 annuity due.
• C) If a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%.
• 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:

Individual Motivations

Personal drives or reasons that propel people to act or behave in certain ways, shaped by desires, goals, and values.

Dominate

To dominate means to have a commanding influence or control over something or someone.

Instinct Theories

Psychological theories suggesting that certain behaviors are innate and driven by evolutionary pressures.

Social Psychologists

Scientists who study how individuals' thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.