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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.

Respuesta :

CodrutRadu
point III is about real interest rate
point I doesn't apply since both nominal and effective ir are calculated by year
let alone the fact that if you look close to those numbers it would probably mean that the loan had 1year and 1 day duration :)

the II answer is the correct one
if the loan is compounded at 6 months you have to add the interest of the first 6 months interest to the total interest to find out the effective interest rate

The second statement is true.

The following information should be considered:

  • The first statement deals with the nominal and effective interest rate.
  • The third statement is related to the real rate of interest.
  • And, the second statement should be considered as true. Also, it is determined the effective interest rate.

Learn more: https://brainly.com/question/14279491?referrer=searchResults

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