Which of the Following Statements Is Most Correct

question 59

Multiple Choice

Which of the following statements is most correct?

• A) The first payment under a 3-year,annual payment,amortized loan for $1,000 will include a smaller percentage (or fraction)of interest if the interest rate is 5 percent than if it is 10 percent.
• B) If you are lending money,then,based on effective interest rates,you should prefer to lend at a 10 percent simple,or quoted,rate but with semiannual payments,rather than at a 10.1 percent simple rate with annual payments.However,as a borrower you should prefer the annual payment loan.
• C) The value of a perpetuity (say for $100 per year)will approach infinity as the interest rate used to evaluate the perpetuity approaches zero.
• D) Statements a,b,and c are all true.
• E) Only statements b and c are true.

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Definitions:

Identical

Exactly the same, without any difference.

Long-run Equilibrium

A state in which all factors of production can be adjusted, allowing for the optimal allocation of resources in a market or economy over time.

Identical Cost Curves

These are cost curves for different firms that have the same shape and attributes, indicating that the firms have the same cost structure at various levels of output.

Industry Produce

The total output of goods and services produced by all the firms operating in a particular industry.