# embry MBAA518 2.3 - Readings and Videos Quiz 2

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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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