When calculating the effective rate of a loan, which statement or statements must be true if n is equal to 1?I. The nominal rate equals the effective rate.II. The length of the loan is exactly one year.III. The interest is compounded annually.

Here, n is the number of compounding periods per year. If n = 1, interest is compounded once a year, so the nominal annual rate and effective annual rate are equal. This does not mean the loan itself lasts exactly one year; it could have a different term. Therefore, statements I and III are true: “I and III.”

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