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:

Empirical Evidence

Information that is acquired by observation or experimentation, serving as a basis for knowledge or validation.

Wage Differences

Variations in compensation received by individuals for their labor, often influenced by factors such as skill level, experience, education, and geographic location.

Ability

Ability refers to the capacity or competence to perform a task or job effectively.

Effort

The amount of physical or mental energy put into a task or activity.