Use the information for the question(s) below.
Two years ago you purchased a new SUV. You financed your SUV for 60 months (with payments made at the end of the month) with a loan at 5.9% APR. Your monthly payments are $617.16 and you have just made your 24th monthly payment on your SUV.
-Amortizing loans are the loans that have monthly payments and are quoted in terms of ________ with ________ compounding.
A) an effective rate; annual
B) an equivalent rate; annual
C) an annual percentage rate; monthly
D) a nominal rate; semiannual

Question

Quizplus · Accepted Answer

Amortizing loans are quoted in terms of annual percentage rate (APR) with monthly compounding. This is because the APR represents the annual cost of borrowing, while the monthly compounding reflects the fact that interest accrues every month on the remaining balance of the loan.

Use the Information for the Question(s) Below