In determining the cost of bank financing, which is the important factor?
A)The prime rate
B)The nominal rate
C)The effective rate
D)The discount rate

Question

Quizplus · Accepted Answer

The effective rate is the important factor in determining the cost of bank financing as it takes into account not only the nominal rate but also any fees or charges associated with the loan. The effective rate represents the true cost of the loan over its term and is important for borrowers to consider when comparing different financing options. The prime rate, nominal rate, and discount rate are all factors that can influence the effective rate but they are not the most important factor on their own.

In Determining the Cost of Bank Financing, Which Is the Important