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In: Finance

13. Which of the following describes the most common bank loan? Group of answer choices The...

13.

Which of the following describes the most common bank loan?

Group of answer choices

The bank loan is compounded monthly and quoted to the lender using the monthly periodic rate.

The bank loan is compounded annually and quoted to the lender using the monthly periodic rate.

The bank loan is compounded monthly and quoted to the lender using the effective annual rate.

The bank loan is compounded annually and quoted to the lender using the effective annual rate.

The bank loan is compounded monthly and quoted to the lender using the annual periodic rate.

Solutions

Expert Solution

Bank always quotes APR which is  Annual periodic rate but the interest is compounded monthly.

When any bank grants loan, it secifies rate, which is APR and not effective annual rate.

Answer : The bank loan is compounded monthly and quoted to the lender using the annual periodic rate.

last option is correct one. [Thumbs up please]

jeff jeffy answered 2 years ago
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