Question
Which of the following statements is true regarding the Annual Percentage Rate (APR)? a) The APR is a calculation that converts the regular interest expense
Which of the following statements is true regarding the Annual Percentage Rate (APR)?
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| a) | The APR is a calculation that converts the regular interest expense + up-front loan fees into a single equivalent interest expense. |
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| b) | The APR is calculated as the contract interest rate on the loan divided by the number of years until maturity. |
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| c) | The APR is never equal to the effective cost of borrowing. |
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| d) | The APR calculation for a 30-year mortgage assumes that the loan prepaid at the end of 5 years. |
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Options Futures And Other Derivatives
Authors: John C. Hull
11th Edition
013693997X, 9780136939979
