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

Question

Which one of the following statements concerning interest rates is correct? A. The stated rate is the same as the effective annual rate. B. Banks prefer more frequent compounding on their savings accounts. C. The annual percentage rate increases as the number of compounding periods per year increases. D. An effective annual rate is the rate that applies if interest were charged annually. E. For any positive rate of interest, the effective annual rate will always exceed the annual percentage rate.

Explanation / Answer

D. An effective annual rate is the rate that applies if interest were charged annually.

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