Which one of the following statements is correct? Answer The APR is equal to the
ID: 2706095 • Letter: W
Question
Which one of the following statements is correct? Answer
The APR is equal to the EAR for a loan that charges interest monthly.
The EAR is always greater than the APR.
The APR on a monthly loan is equal to (1 + monthly interest rate)12 - 1.
The APR is the best measure of the actual rate you are paying on a loan.
The EAR, rather than the APR, should be used to compare both investment and loan options.
Explanation / Answer
The EAR, rather than the APR, should be used to compare both investment and loan options.