Which One of the Following Statements Concerning the Annual Percentage

question 117

Multiple Choice

Which one of the following statements concerning the annual percentage rate is correct?

• A) The annual percentage rate considers interest on interest.
• B) The rate of interest you actually pay on a loan is called the annual percentage rate.
• C) The effective annual rate is lower than the annual percentage rate when an interest rate is compounded quarterly.
• D) When firms advertise the annual percentage rate they are violating U.S. truth-in-lending laws.
• E) The annual percentage rate equals the effective annual rate when the rate on an account is designated as simple interest.

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