You Are Considering Two Loans

question 113

Multiple Choice

You are considering two loans.The terms of the two loans are equivalent with the exception of the interest rates.Loan A offers a rate of 7.45% compounded daily.Loan B offers a rate of 7.5% compounded semi-annually.Loan _____ is the better offer because______.

• A)A; you will pay less interest
• B)A; the annual percentage rate is 7.45%
• C)B; the stated rate is 7.64%
• D)B; the interest is compounded less frequently
• E)B; the annual percentage rate is 7.64%

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Definitions:

Economic Losses

Economic losses refer to the reduction in financial value experienced by individuals, businesses, or the economy as a whole due to adverse events or decisions.

Economic Gains

Increases in economic welfare, often measured by improvements in income, production, or satisfaction levels.

Salsa Manufacturers

Companies or entities involved in the production and distribution of salsa, a type of spicy sauce.

Law of Supply

The economic principle stating that as the price of a good increases, the quantity supplied of the good also increases, ceteris paribus.