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What are the characteristics of an annual percentage rate? Check all that apply
It can change over time for certain kinds of loans.
It is the interest charged each year for a loan.
It requires the borrower to pay all the principal at once.
It can be reduced to reflect the borrower’s credit history.
It has little impact on the amount the borrower must repay.

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Answer:

The characteristics of an annual percentage rate are that it can change over time for certain kinds of loans; it is the interest charged each year for a loan; and it can be reduced to reflect the borrower’s credit history.

Explanation:

The Annual Percentage Rate allows a homogeneous comparison of the interest rates of multiple financial operations with different capitalization periods, using the same annual time base. It allows to homogenize different nominal rates, expenses, commissions, settlement periods, etc. It is definitely the annual interest that is generated once discounted the expenses and commissions for one or several capitalizations at nominal interest.

A fixed annual nominal rate would correspond to different values ​​of APR if the number of capitalizations varies within a year or if the expenses or commissions change.

However, the APR does not include the expenses that the client can avoid (for example, the expenses of transfer of funds), those that are paid to third parties or companies (brokerage, notarial fees and taxes) or expenses for insurance or guarantees (except for premiums intended to guarantee the entity the repayment of the credit in case of death, disability or unemployment, provided that the entity imposes its subscription for the granting of the loan).

The annual percentage rate is the rate that compares the interest rates of multiple finance operations along with the varied capitalization with the help of the same time base annually.

The correct options are:

  • It can change over time for certain kinds of loans.
  • It is the interest charged each year for a loan.
  • It can be reduced to reflect the borrower’s credit history.

The reason for the correct answer:

  • It can change over time for certain kinds of loans is correct because the percentage of interest rate changes as per the category of loan. It varies with the varied variety of loans in financial institutions.
  • It is the interest charged each year for a loan is correct because each year the interest rate is changed as per the demand of the loan and also as per the inflation rate in the economy.
  • It can be reduced to reflect the borrower’s credit history is correct because the fluctuation in the interest rates also depends on the credit history of the borrowers.

The reason for the wrong answers:

  • It requires the borrower to pay all the principal at once is wrong because the principal amount can also be paid in installments like quarterly or half-yearly. The once payment of principal is not mandatory in any banks.
  • It has little impact on the amount the borrower must repay is wrong because the annual interest rates have a great impact on the amount of the borrowers. The amount he borrows and the amount he repays has a difference that is the interest amount added to the repay amount.

Therefore the annual interest rates depend on the loan amount, credit of the borrower, and the yearly inflation rate.

To know more about the annual interest rates, refer to the link below:

https://brainly.com/question/16383107?referrer=searchResults