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

question 34

Multiple Choice

Suppose that over the life of the loan,the total interest expense for a monthly loan is $17,000,while the total interest payment for an annual loan is $19,000.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 slower pace reduces the overall interest paid on a loan.
• D)Reducing principal at a slower pace increases the overall interest paid on a loan.

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Definitions:

Encoding

The process of transforming information into a format that can be stored in the brain; a crucial step in the process of creating new memories.

Mental Age

A measure of a person's intellectual development relative to people of their chronological age, indicating how far they have progressed in their cognitive abilities.

Cognitive Abilities

The mental capabilities that involve the acquisition, processing, retention, and application of information, such as memory, reasoning, attention, and problem-solving.

Encoding

The process of translating sensory input into a form or format that can be stored and used by the memory system.