Suppose That Over the Life of the Loan,the Total Interest

question 16

Multiple Choice

Suppose that over the life of the loan,the total interest expense for a monthly loan is $7,000,while the total interest payment for an annual loan is $8,000.Which of the below statements is FALSE?

• A)The difference reflects the reduction of the principal each month versus the annual reduction of the principal.
• B)The more frequent the payment,the lower the total interest expense over the life of the loan,even though the effective rate of the loan is higher.
• C)Reducing principal at a faster pace reduces the overall interest paid on a loan.
• D)The more frequent the payment,the lower the total interest expense over the life of the loan,even though the effective rate of the loan is lower.

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Definitions:

Formal Operational Stage

A period in Piaget's theory marking the ability of adolescents and adults to think abstractly, logically, and systematically.

Abstractly

Relating to the process of thinking in a way that is not anchored in concrete reality, but involves understanding concepts and ideas that are not physically present.

Cognitive Developmental Task

Activities or challenges that promote cognitive growth and development, tailored to an individual's age and stage of cognitive maturation.

Young Adulthood

A life stage occurring approximately from the late teens to the early thirties, characterized by exploration, independence, and the formation of intimate relationships.