Which of the Following Will Increase the Effective Annual Rate

question 65

Multiple Choice

Which of the following will increase the effective annual rate (EAR) of a loan?

• A)Decreasing the frequency of the interest rate compounding
• B)Applying only simple interest
• C)Decreasing the annual percentage rate (APR)
• D)Increasing either the annual percentage rate (APR)or the compounding frequency
• E)Changing from continuous compounding to daily compounding of interest

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Definitions:

Debt

An amount of money borrowed by one party from another, with the condition that it is to be paid back, often with interest.

Enforceable

A legal term referring to a contract or agreement that is recognized by law and can be upheld in a court of law.

Oral Order

A verbal command or instruction to perform a task or service, which can be legally binding in certain contexts.

Disposable Nitrile Gloves

Single-use gloves made from synthetic rubber used for hand protection, often in medical and industrial settings.