Which of the following statements is CORRECT, assuming positive interest rates and holding other things constant?
A. The present value of a 5-year, $250 annuity due will be lower than the PV of a similar ordinary annuity.
B. A 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage.
C. A bank loan's nominal interest rate will always be equal to or less than its effective annual rate.
D. If an investment pays 10% interest, compounded annually, its effective annual rate will be less than 10%.
E. Banks A and B offer the same nominal annual rate of interest, but A pays interest quarterly and B pays semiannually. Deposits in Bank B will provide the higher future value if you leave your funds on deposit.
Answer: C
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If a lender makes a mistake in the disclosure of the APR on a loan, there is a 30-day right of rescission for the home buyer
Indicate whether the statement is true or false
Scenario B. Three students-Bernardo, Astrid, and Rajiv-are discussing how to improve efficiency in a manufacturing context. Bernardo says that the company must work toward achieving lower costs per unit of production. Rajiv believes that the company should use the same resources to make more related products. Astrid holds that avoiding the costs of growing too large and creating waste will improve efficiency.When he says that the company should use the same resources to make more related products, Rajiv is calling for
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All of the following are benefits that can be attributed to the effective use of a risk management plan EXCEPT:
a. It enables project managers to eliminate or reduce the impact of some threats. b. It enables the project manager to identify and eliminate all risks c. It facilitates communication with various project stakeholders. d. It enables project managers to capitalize on some opportunities.
Assume that the risk-free rate remains constant, but the market risk premium declines. Which of the following is most likely to occur?
A. The required return on a stock with beta > 1.0 will increase. B. The return on "the market" will remain constant. C. The return on "the market" will increase. D. The required return on a stock with beta < 1.0 will decline. E. The required return on a stock with beta = 1.0 will not change.