Which of the following statements is true?
A)All rates of return are just interest rates earned on an investment.
B)An interest rate is the rate of return on a loan.
C)An interest payment can have unlimited upside potential.
D)All of the above are true statements.

Question

Quizplus · Accepted Answer

An interest rate is the rate of return on a loan. This statement is true. Option A is false because rates of return can include other components such as dividends, capital gains, or rental income. Option C is also false since interest payments have a fixed amount and do not have unlimited upside potential. Therefore, only option B is true. An interest rate is specifically the rate of return earned on a loan or investment, while a rate of return is a broader term encompassing all earnings on an investment, not just interest. Option A is false as not all rates of return are just interest rates, and option C is also false as interest payments usually have a fixed rate of return and do not have unlimited upside potential.

Which of the Following Statements Is True