Which of the following statements is CORRECT?

Question

Quizplus · Accepted Answer

An annuity due is worth more than an ordinary annuity, all else equal, because each payment is received one period earlier, so it has more time to earn interest. Therefore, the present value of a 3-year, $150 annuity due exceeds the present value of a 3-year, $150 ordinary annuity.

The other statements are not correct:
A) An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is greater than 6%, because interest is earned on interest more frequently.
C) The effective rate can be greater than 8% if the compounding frequency is more frequent than once per year.
D) If there are annual payments, all three rates will be the same.
E) The proportion of the payment that goes toward interest decreases over time on a fully amortized loan.

Which of the Following Statements Is CORRECT