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Question
Which of the following statements is CORRECT?a. An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%.
b. The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due.
c. If a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%.
d. If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different.
e. The proportion of the payment that goes toward interest on a fully amortized loan increases over time.
Answer
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