Assuming All APRs Equal,the Effective Interest Rate on a Loan

question 5

Multiple Choice

Assuming all APRs equal,the effective interest rate on a loan is highest when:

• A)The loan has no points and a 30-year maturity and is prepaid in five years
• B)The loan has no points and is prepaid at maturity
• C)Points are charged and the loan is paid off at maturity in 30 years
• D)Points are charged and the loan has a 30-year maturity but is prepaid in five years

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