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1. Given an interest rate of zero percent, the future value of a lump sum invested today will always: A. be equal to $0. B.

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1. Given an interest rate of zero percent, the future value of a lump sum invested today will always: A. be equal to $0. B. be greater than the initial investment amount. C. be smaller than the initial investment amount. D. be equal to the initial investment amount. E. increase if the investment time period is lengthened. Answer: 2. Which one of the following statements is correct concerning annual percentage rates (APRs) and effective annual rates (EARs)? A. The APR is equal to the EAR for a loan that charges interest monthly. B. The APR is greater than the EAR for a loan that charges interest monthly. C. The APR is equal to one plus the monthly interest rate raised to the 12th power. D. The EAR is equal to the monthly interest rate multiplied by 12 . E. The EAR is the best measure of the actual rate you are paying on a loan

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