Question
Consider two loans with a1-year maturity and identical facevalues: a(n) 7.9% loan with a 1.02% loan origination fee anda(n) 7.9% loan with a 5.4% (no-interest)
Consider two loans with a1-year maturity and identical facevalues: a(n) 7.9% loan with a 1.02% loan origination fee anda(n) 7.9% loan with a 5.4% (no-interest) compensating balance requirement. Which loan would have the higher effective annual rate (EAR)? Why?
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Personal Finance Building Your Future
Authors: Robert B. Walker, Kristy P. Walker
1st edition
9780077861728, 978-0073530659
