Which of the following one-year $1000 bank loans offers the lowest effective annual rate? a. A loan

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Which of the following one-year $1000 bank loans offers the lowest effective annual rate?

a. A loan with an APR of 6%, compounded monthly

b. A loan with an APR of 6%, compounded annually, that also has a compensating balance requirement of 10% (on which no interest is paid)

c. A loan with an APR of 6%, compounded annually, that has a 1% loan origination fee Appendix

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Corporate Finance

ISBN: 9780137845071

6th Edition

Authors: Jonathan Berk, Peter DeMarzo

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