Which of the following is/are TRUE?
I. The EAR can never exceed the APR.
II. The APR can never exceed the EAR.
III. The APR and EAR can never be equal.
A) Only I is true.
B) Only II.is true.
C) Only II & III are true.
D) Only I & III are true.

Question

Quizplus · Accepted Answer

The Effective Annual Rate (EAR) reflects the compounding effects of interest and is always higher than the Annual Percentage Rate (APR). Therefore, statement I is false while statement II is true. Statement III is incorrect as well since the APR and EAR can be equal for loans with no fees or charges.

Which of the Following Is/are TRUE