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A $10,000, One-Month Loan Pays an Annualized Interest Rate of 10

Question 1

Multiple Choice

A $10,000, one-month loan pays an annualized interest rate of 10 percent. The dollar amount of interest received from the loan is


A) largest if simple interest is paid.
B) largest if interest is compounded monthly.
C) largest if interest is compounded quarterly.
D) the same whether interest is simple, compounded monthly, or compounded quarterly.

Correct Answer:

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