Which one of the following statements concerning interest rates is correct?

Question

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The annual percentage rate (APR) is the rate that would apply if interest were charged annually, taking into account the effect of compounding. The stated rate is simply the rate advertised by the lender, which may not reflect the true cost of borrowing due to factors like fees and compounding. The APR increases as the number of compounding periods per year increases, but banks may prefer more frequent compounding on their savings accounts to encourage customers to keep their money in the account longer. It is possible for the APR to be lower than the stated rate, but the APR will never be lower than the periodic interest rate (i.e. the rate charged for each compounding period).

Which One of the Following Statements Concerning Interest Rates Is