Which of the Following Statements Is Most Correct

question 59

Multiple Choice

Which of the following statements is most correct?

• A) The first payment under a 3-year,annual payment,amortized loan for $1,000 will include a smaller percentage (or fraction)of interest if the interest rate is 5 percent than if it is 10 percent.
• B) If you are lending money,then,based on effective interest rates,you should prefer to lend at a 10 percent simple,or quoted,rate but with semiannual payments,rather than at a 10.1 percent simple rate with annual payments.However,as a borrower you should prefer the annual payment loan.
• C) The value of a perpetuity (say for $100 per year)will approach infinity as the interest rate used to evaluate the perpetuity approaches zero.
• D) Statements a,b,and c are all true.
• E) Only statements b and c are true.

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