Which Is the Best Definition of a Stated Interest Rate

question 13

Multiple Choice

Which is the best definition of a stated interest rate or quoted interest rate?

• A) The interest rate charged per period multiplied by the number of periods per year.
• B) An annuity for which the cash flows occur at the beginning of the period.
• C) A level stream of cash flows for a fixed period of time.
• D) The interest rate expressed as if it were compounded once per year.
• E) The interest rate expressed in terms of the interest payment made each period. Also, quoted interest rate.

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Definitions:

Interest

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

Merchandise

Goods that are bought and sold in business, often referred to in the context of retail, wholesale, or e-commerce.

Maturity Date

The specified date on which the final payment of a loan or financial instrument, such as a bond, is due and payable.

Notes Payable

Written promises to pay specified sums of money at future dates, categorized as liabilities.