The Loan Alternative with the Highest ATIRR Will Always Be

question 1

True/False

The loan alternative with the highest ATIRR will always be preferable to the borrower.

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Definitions:

Effective Interest Method

A method of calculating the amortized cost of a bond and the amount of interest expense over the life of the bond by applying the effective interest rate to the carrying amount of the bond.

Accrued Interest

Interest that has been earned but not yet received or recorded as payment, often associated with loans or bonds.

Bond Sinking Fund

A fund set up by an issuer of a bond in which money is saved over time for the sole purpose of redeeming or buying back some or all of the bonds prior to their maturity.

Bond Sinking Fund

A method employed by issuers of bonds to set aside money over time to retire their debt at maturity.