Which one of the following statements related to loan interest rates is correct?
A) The annual percentage rate considers the compounding of interest.
B) When comparing loans you should compare the effective annual rates.
C) Lenders are most apt to quote the effective annual rate.
D) Regardless of the compounding period, the effective annual rate will always be higher than the annual percentage rate.
E) The more frequent the compounding period, the lower the effective annual rate given a fixed annual percentage rate.
Correct Answer:
Verified
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