Which of the following statements about compounding and interest rates is FALSE?
A)
Compounding essentially means earning interest on interest.
B)
All else equal, the longer the term of a loan, the lower will be the total interest you pay.
C)
Present values and discount rates move in opposite directions.
D)
On monthly compounded loans, the effective annual rate (EAR) will exceed the annual percentage rate (APR).
Since the proportion of each payment going toward the principal decreases as the original loan maturity increases, the total dollars interest paid over the life of the loan also increases.
发表于 2006-4-12 21:56
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