Which of the following statements concerning the annual percentage rate are correct?
I.When making financial decisions,you should compare annual percentage rates rather than simple interest rates.
II.The more frequently interest is compounded,the higher the annual percentage rate.
III.A quoted rate of 6% compounded continuously has a higher annual percentage rate than if the rate were compounded daily.
IV.When borrowing and choosing which loan to accept,you should select the offer with the highest stated interest rate.

Question

Quizplus · Accepted Answer

I. When making financial decisions, you should compare annual percentage rates rather than simple interest rates. This is because the annual percentage rate (APR) takes into account the effect of compounding, which can significantly increase the effective interest rate.II. The more frequently interest is compounded, the higher the annual percentage rate. This is because compounding allows interest to be earned on interest, which can lead to a higher effective interest rate.III. A quoted rate of 6% compounded continuously has a higher annual percentage rate than if the rate were compounded daily. This is because continuous compounding is the most frequent form of compounding, and it therefore results in the highest effective interest rate.

Which of the Following Statements Concerning the Annual Percentage Rate