Which of the Following Statements Is CORRECT, Assuming Positive Interest

question 94

Multiple Choice

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

• A) Banks A and B offer the same nominal annual rate of interest, but A pays interest quarterly and B pays semiannually.Deposits in Bank B will provide the higher future value if you leave your funds on deposit.
• B) The present value of a 5-year, $250 annuity due will be lower than the PV of a similar ordinary annuity.
• C) A 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage.
• D) A bank loan's nominal interest rate will always be equal to or less than its effective annual rate.
• E) If an investment pays 10% interest, compounded annually, its effective annual rate will be less than 10%.

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Definitions:

Medical Expenses

Costs incurred by individuals for healthcare services, treatments, medications, and other health-related needs.

TANF

Temporary Assistance for Needy Families, a federal assistance program in the United States aimed at helping families achieve self-sufficiency through employment.

TANF Recipients

TANF recipients are individuals or families who receive assistance under the Temporary Assistance for Needy Families program, a federal initiative designed to help needy families achieve self-sufficiency.

Tax Cuts

Reductions in the amount of taxes that individuals or corporations are required to pay to the government.