Which of the Following Statements Is CORRECT

question 33

Multiple Choice

Which of the following statements is CORRECT?

• A) The present value of a 3-year,$150 ordinary annuity will exceed the present value of a 3-year,$150 annuity due.
• B) If a loan has a nominal annual rate of 8%,then the effective rate will never be less 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:

Regression Analysis

An analytical technique employed to investigate the correlation between a dependent variable and one or more independent variables.

Forecast Equation

A Forecast Equation is an algorithm or model used in statistics and econometrics to predict future values based on past and present information.

Regression Model

A statistical model that examines the relationship between a dependent variable and one or more independent variables.

Indicator Variables

Variables used in statistical models to represent categorical data by assigning a numerical value, typically 0 or 1, to each category.