In a period of rising interest rates,the times-prime method causes the customer's loan rate to rise faster than the prime-plus method.

Question

Quizplus · Accepted Answer

The times-prime method calculates the interest rate by multiplying the prime rate by a predetermined factor, resulting in a higher rate increase when the prime rate rises. In contrast, the prime-plus method adds a fixed percentage to the prime rate, resulting in a smaller increase in the interest rate when the prime rate rises. Therefore, the statement is true - the times-prime method causes the customer's loan rate to rise faster than the prime-plus method in a period of rising interest rates.

In a Period of Rising Interest Rates,the Times-Prime Method Causes