Which One of the Following Statements Concerning Interest Rates Is

question 12

Multiple Choice

Which one of the following statements concerning interest rates is correct?

• A) The stated rate is the same as the effective annual rate.
• B) An effective annual rate is the rate that applies if interest were charged annually.
• C) The annual percentage rate increases as the number of compounding periods per year increases.
• D) Banks prefer more frequent compounding on their savings accounts.
• E) For any positive rate of interest, the effective annual rate will always exceed the annual percentage ratE.

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Definitions:

Administered Immediately

Carried out or applied without delay; executed promptly.

Negative Reinforcement

A behavioural strategy that involves the removal of an unpleasant stimulus to increase the likelihood of a desired response.

Contingent

Dependent on or conditioned by something else; occurring or existing only if certain circumstances are the case.

Unpleasant Event

An incident or occurrence that causes discomfort, distress, or dissatisfaction.