The R&M Bank Has Offered You the Choice Between Two $\bullet$

question 64

Multiple Choice

The R&M Bank has offered you the choice between two loans:
$\bullet$ #1 charges interest at a rate of 9% compounded quarterly.
$\bullet$ #2 charges interest at a rate of 9.50% compounded semi-annually.
Which loan do you prefer and why?

• A)#1, lower effective rate
• B)#2, lower effective rate
• C)#1, higher effective rate
• D)#2, higher effective rate

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