Normally,a Canadian Mortgage Rate Is Quoted as ________

question 5

Multiple Choice

Normally,a Canadian mortgage rate is quoted as ________.

• A) an effective annual rate with annual compounding
• B) a nominal interest rate with monthly compounding
• C) a real interest rate with quarterly compounding
• D) an annual percentage rate with semiannual compounding

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Definitions:

Nominal Interest Rates

The interest rate prior to inflation adjustment, denoting the nominal value of interest payments.

Real Interest Rates

The interest rates adjusted for inflation, more accurately reflecting the true cost of borrowing.

Real Interest Rate

The interest rate, once revised for inflation, to represent the actual borrowing cost or the real savings yield.

Inflation Rate

The measure of how rapidly the general price point of goods and services escalates, which in turn diminishes the power to buy.