Pick the correct statements related to loan interest rates from below.

Multiple Choice

• The annual percentage rate considers the compounding of interest.

• When comparing loans you should compare the effective annual rates.

• Lenders are most apt to quote the effective annual rate.

• Regardless of the compounding period, the effective annual rate will always be higher than the annual percentage rate.

• The more frequent the compounding period, the lower the effective annual rate given a fixed annual percentage rate.