Which of the Following Statements Is CORRECT, Assuming Positive Interest

question 15

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 greater than its effective annual rate.
• E) if an investment pays 10% interest, compounded quarterly, its effective annual rate will be greater than 10%.

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Definitions:

Operant Conditioning

A learning process whereby the strength of a behavior is modified by reinforcement or punishment.

Variable-Ratio Reinforcement

A reinforcement strategy in which a response is rewarded after an unpredictable number of responses, promoting a high and steady rate of response.

Internal Locus

The belief that one has control over their life and the outcomes of their actions, as opposed to external forces.

Control

In experimental research, the standard by which experimental observations are compared, or the ability to direct influence or regulate a situation or mechanism.