Which of the Following Statements Concerning the Effective Annual Rate

question 108

Multiple Choice

Which of the following statements concerning the effective annual rate are correct?
I.When borrowing and choosing which loan to accept,you should select the offer with the highest effective annual rate.
II.The more frequently interest is compounded,the higher the effective annual rate.
III.A quoted rate of 6% compounded continuously has a higher effective annual rate than if the rate were compounded daily.
IV.When making financial decisions,you should compare effective annual rates rather than annual percentage rates.

• A)I and II only
• B)I and IV only
• C)I, II, and III only
• D)II, III, and IV only
• E)I, II, III, and IV

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