Which One of the Following Statements Concerning Interest Rates Is

question 76

Multiple Choice

Which one of the following statements concerning interest rates is correct?

• A)Savers would prefer annual compounding over monthly compounding.
• B)The effective annual rate decreases as the number of compounding periods per year increases.
• C)The effective annual rate equals the annual percentage rate when interest is compounded annually.
• D)Borrowers would prefer monthly compounding over annual compounding.
• E)For any positive rate of interest, the effective annual rate will always exceed the annual percentage rate.

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Definitions:

Fulfill

To achieve or complete a duty, requirement, or condition.

Futures Contract

A contractual arrangement to purchase or sell a specific asset or financial instrument at a fixed price on a future date.

Contract Size

The deliverable quantity of commodities or financial instruments underlying futures and options contracts that is specified by the contract.

Acceptable Price Range

The range of prices within which buyers and sellers are willing to transact, often determined by market conditions and personal valuation.