Which of the Following Statements Is FALSE About Interest Rates

question 99

Multiple Choice

Which of the following statements is FALSE about interest rates?

• A) As interest rates may be quoted for different time intervals, it is often necessary to adjust the interest rate to a time period that matches that of cash flows.
• B) The effective annual rate indicates the amount of interest that will be earned at the end of one year.
• C) The annual percentage rate indicates the amount of simple interest earned in one year.
• D) The annual percentage rate indicates the amount of interest including the effect of compounding.

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