Which One of the Following Statements Concerning Interest Rates Is

question 122

Multiple Choice

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

• A)The stated rate is the same as the annual percentage rate.
• B)An annual percentage rate is the rate that applies if interest were charged annually.
• C)The annual percentage rate increases as the number of compounding periods per year increases.
• D)Banks prefer more frequent compounding on their savings accounts.
• E)For any positive rate of interest,the annual percentage rate will always exceed the stated interest rate.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members from earnings, typically in the form of cash.

Net Income

The amount of money remaining after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from a company's total revenue.

Indirect Method

A financial reporting approach used primarily for cash flow statements that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.

Cash Dividends

Payments made by a company to its shareholders out of its profits or reserves.