Which of the Following Is Not Correct About Cash Advances

question 31

Multiple Choice

Which of the following is not correct about cash advances?

• A)There is no grace period for cash advances.
• B)The interest rate for cash advances is higher than for purchases.
• C)A cash advance is like a loan.
• D)A transaction fee of 5 percent may be charged.

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Definitions:

Effective Rate

The actual interest rate an individual earns or pays on an investment or loan, taking into account the effect of compounding.

Semi-annually Compounded

This refers to the process of applying interest to a principal balance twice a year, effectively increasing the amount of interest earned or paid over time.

Rate of Return

The profit or deficit incurred on an investment during a certain timeframe, represented as a proportion of the investment's original price.

Maturity Date

The date on which the principal and accrued interest on an investment or loan are due.