Which of the Following Statements Is True of Annual Percentage

question 93

Multiple Choice

Which of the following statements is true of annual percentage rate (APR) ?

• A) The Truth-in-Savings Act was passed by Congress to ensure that the true cost of credit was disclosed to consumers.
• B) The Truth-in-Lending Act was passed to provide consumers an accurate estimate of the return they would earn on an investment.
• C) The Truth-in-Savings Act and Truth-in-Lending Act require by law that the APR be disclosed on all consumer loans and savings plans.
• D) The annual percentage rate (APR), and not the effective annual interest rate (EAR), represents the true economic interest rate.

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Definitions:

Liability Insurance

Insurance that provides protection against claims resulting from injuries and damage to people and/or property, covering legal costs and payouts for which the insured party is responsible.

Prepaid

Expenses that are paid for in advance of receiving the benefit, often recorded as assets until the expense is incurred.

Equipment Rent

The cost incurred by a company for using equipment owned by another entity for a specified period.

Service Contract

An agreement between a customer and a service provider detailing the terms of service delivery, including scope, quality, and responsibilities.