Which of the Following Statements Is Correct,assuming Positive Interest Rates

question 104

Multiple Choice

Which of the following statements is correct,assuming positive interest rates and other things held constant?

• A)A 5-year, $250 annuity due will have a lower present value than a similar ordinary annuity.
• B)A 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage.
• C)A typical investment's nominal interest rate will always be equal to or less than its effective annual rate.
• D)If an investment pays 10% interest, compounded annually, its effective annual rate will be less than 10%.

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Definitions:

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An economic system without governmental oversight and control, where the free market dictates prices, production, and distribution of goods and services.

Cosmopolitan Character

The quality of being familiar with and at ease in many different countries and cultures, often associated with an openness to new ideas and diversity.

Treaty of Versailles

The peace treaty that officially ended World War I in 1919, imposing significant reparations and territorial changes on Germany.

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The 32nd President of the United States (1933–1945), he led the country during the Great Depression and World War II, implementing the New Deal.