Which of the following statements is CORRECT? The present value of a 3-year, $15

Question

Which of the following statements is CORRECT?

The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due.

If a loan has a nominal annual rate of 8%, then the effective rate will never be less than 8%.

If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different.

The proportion of the payment that goes toward interest on a fully amortized loan increases over time.

An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%.

Explanation / Answer

Statement (B) is the correct answer i.e. if a loan has a nominal annual rate of 8%, then the effective rate will never be less than 8%. Hence the correct answer is (B).

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.