embry MBAA518 2.3 - Readings and Videos Quiz 2

Jun 27th, 2016
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Question Question 1 Which one of the following statements concerning the annual percentage rate is correct? The rate of interest you actually pay on a loan is called the annual percentage rate. The effective annual rate is lower than the annual percentage rate when an interest rate is compounded quarterly. The annual percentage rate considers interest on interest. The annual percentage rate equals the effective annual rate when the rate on an account is designated as simple interest. When firms advertise the annual percentage rate they are violating U.S. truth-in-lending laws. Question 2 Paying off long-term debt by making installment payments is called: funding the debt. foreclosing on the debt. calling the debt. amortizing the debt. None of these. Question 3 An annuity stream of cash flow payments is a set of: increasing cash flows occurring each time period forever. level cash flows occurring each time period for a fixed length of time. arbitrary cash flows occurr

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embry MBAA518 2.3 - Readings and Videos Quiz 2QuestionQuestion 1Which one of the following statements concerning the annual percentage rate is correct?The rate of interest you actually pay on a loan is called the annual percentage rate.The effective annual rate is lower than the annual percentage rate when an interest rate iscompounded quarterly.The annual percentage rate considers interest on interest.The annual percentage rate equals the effective annual rate when the rate on an account isdesignated as simple interest.When firms advertise the annual percentage rate they are violating U.S. truth-in-lending laws.Question 2Paying off long-term debt by making installment payments is called:funding the debt.foreclosing on the debt.calling the debt.amortizing the debt.None of these.Question 3An annuity stream of cash flow payments is a set of:increasing cash flows occurring each time period forever.level cash flows occurring each time period for a fixed length of time.arbitrary cash flows occurring each time period for no more than 10 years.increasing cash flows occurring each time period for a fixed length of time.level cash flows occurring each time period forever.Question 4Which of the following statements concerning the effective annual rate are correct?I. When making financial decisions, you should compare effective annual rates rather thanannual percentage rates.II. The more frequently interest is compounded, the higher the effective annual rate

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