Which of the Following Statements Is Correct

question 77

Multiple Choice

Which of the following statements is correct?

• A) The PV of an ordinary annuity will be larger than the PV of an annuity due,other things held constant.
• B) The effective annual rate will always be greater than the simple rate except in situations where the periodic rate is equal to the simple rate.
• C) If you were borrowing money from a bank,and the simple interest rate was 10 percent,you would be better off if the bank used daily rather than quarterly compounding.
• D) If you were borrowing money from a bank,and the simple interest rate was 10 percent,daily compounding,you would be better off if the bank used a 365-day year rather than a 360-day year.
• E) $100 placed in a bank account which pays 6 percent will double faster if the bank pays interest annually rather than daily.

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Definitions:

Outliers

Outliers are data points that differ significantly from other observations, often lying far outside the majority of a data distribution.

Parameter

A numeric characteristic that describes and summarizes an entire population of data.

Statistic

A characteristic or measure obtained from a sample of data, used to estimate the value of a population parameter.

Variance

A measure of how spread out a set of data is, calculated as the average of the squared differences from the Mean.