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

question 32

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 greater than its effective annual rate.
• D) If an investment pays 10% interest,compounded quarterly,its effective annual rate will be greater 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:

Nonemployee Agent

A nonemployee agent is an individual or entity that acts on behalf of another, without being on their formal payroll or considered an employee.

Principal

The main party to a transaction, contract, or financial instrument who has the primary interest and rights.

Negligent And Intentional Acts

Legal terms referring to actions causing harm or damage, with negligence lacking intent and intentional acts being deliberate.

Respondeat Superior

A legal doctrine that holds an employer or principal legally responsible for the wrongful actions of an employee or agent, if such actions occur within the scope of employment or agency.