Answer:
C : Less than the effective interest rate
Explanation:
The complete question is as follows;
On April 31, 2016, Elkhorn Associates borrowed $10 million cash from Colonial Bank and issued a 5-month, noninterest-bearing note, priced to yield an effective interest rate of 10%. The stated discount rate on this loan is:
A. More than the effective interest rate.
B. Less than the effective interest rate.
C. Equal to the effective interest rate.
D. Unrelated to the effective interest rate
Explanation;
Here, the correct answer is that the stated discount rate on the loan is less than the effective interest rate.
