Interest Rates Quiz Exam Question &
Answers ( Latest 2025 /2026)
When calculating a loan's effective rate, if the interest
compounds every two months, what value of n do you
plug into your equation? - CORRECT ANSWERS ✔✔c.
6
Thomas has a loan with a nominal interest rate of
6.4624% and an effective interest rate of 6.4715%. Which
of the following must be true?
I. The loan has a duration greater than one year.
II. The interest on Thomas's loan is compounded more
than once yearly.
III. The economy was strong when Thomas took out the
loan. - CORRECT ANSWERS ✔✔b.
II only
What effect does inflation have on interest rates, and
why? - CORRECT ANSWERS ✔✔d.
Inflation increases interest rates, because lenders must
charge more to gain a benefit on devalued money.
When calculating a loan's effective interest rate, if the
nominal rate is 8.5%, what value of i do you plug into
your equation? - CORRECT ANSWERS ✔✔c.
, Interest Rates Quiz Exam Question &
Answers ( Latest 2025 /2026)
0.085
Anna's bank gives her a loan with a stated interest rate of
10.22%. How much greater will Anna's effective interest
rate be if the interest is compounded daily, rather than
compounded monthly? - CORRECT ANSWERS ✔✔d.
0.0463 percentage points
RJ has two loans. Loan H has a nominal rate of 5.68%,
compounded daily. Loan I has a nominal rate of 6.33%,
compounded monthly. Which loan's effective rate had the
greater increase, relative to its nominal rate, and how
much greater is its increase than that of the other loan? -
CORRECT ANSWERS ✔✔a.
Loan I's increase was 0.03 percentage points greater than
Loan H's.
Say you are considering two loans. Loan F has a nominal
interest rate of 5.66%, compounded monthly. Loan G has
a rate of 6.02%, compounded semiannually. Which loan
will give the lower effective interest rate, and how much
lower will it be? - CORRECT ANSWERS ✔✔c.
Loan F's effective rate will be 0.302 percentage points
lower than Loan G's.
Answers ( Latest 2025 /2026)
When calculating a loan's effective rate, if the interest
compounds every two months, what value of n do you
plug into your equation? - CORRECT ANSWERS ✔✔c.
6
Thomas has a loan with a nominal interest rate of
6.4624% and an effective interest rate of 6.4715%. Which
of the following must be true?
I. The loan has a duration greater than one year.
II. The interest on Thomas's loan is compounded more
than once yearly.
III. The economy was strong when Thomas took out the
loan. - CORRECT ANSWERS ✔✔b.
II only
What effect does inflation have on interest rates, and
why? - CORRECT ANSWERS ✔✔d.
Inflation increases interest rates, because lenders must
charge more to gain a benefit on devalued money.
When calculating a loan's effective interest rate, if the
nominal rate is 8.5%, what value of i do you plug into
your equation? - CORRECT ANSWERS ✔✔c.
, Interest Rates Quiz Exam Question &
Answers ( Latest 2025 /2026)
0.085
Anna's bank gives her a loan with a stated interest rate of
10.22%. How much greater will Anna's effective interest
rate be if the interest is compounded daily, rather than
compounded monthly? - CORRECT ANSWERS ✔✔d.
0.0463 percentage points
RJ has two loans. Loan H has a nominal rate of 5.68%,
compounded daily. Loan I has a nominal rate of 6.33%,
compounded monthly. Which loan's effective rate had the
greater increase, relative to its nominal rate, and how
much greater is its increase than that of the other loan? -
CORRECT ANSWERS ✔✔a.
Loan I's increase was 0.03 percentage points greater than
Loan H's.
Say you are considering two loans. Loan F has a nominal
interest rate of 5.66%, compounded monthly. Loan G has
a rate of 6.02%, compounded semiannually. Which loan
will give the lower effective interest rate, and how much
lower will it be? - CORRECT ANSWERS ✔✔c.
Loan F's effective rate will be 0.302 percentage points
lower than Loan G's.
