Option B is correct
Two accounts with the same quoted apr should have same compounding periods in a year to have same ear
4. Two accounts with the same quoted annual interest rate (APR) would have: A) same effective...
Which of the following statements about APR (Annual Percentage Rate) and EAR (Effective Annual Rate) is NOT true? EAR is usually higher than APR if the compounding frequency is more than annual. EAR is the real interest rate consumer pays. APR considers compounding. Truth-in-lending laws in the U.S. require that lenders disclose an APR on virtually all consumer loans.
Time Value of Money: Comparing Interest Rates Different compounding periods, are used for different types of investments. In order to properly compare Investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The Select interest rate is quoted by borrowers and lenders, and it is also called the annual percentage rate...
Your bank pays a quoted annual (nominal) rate of 12%. However, it compounds interest every week (52 times a year). What is the effective annual rate (EAR)? Select one: a. Less than 12% b. Exactly 12% c. 12.01% - 12.35% d. 12.36% - 12.70% e. More than 12.70%
if two loans have the same nominal rate but different compounding frequencies, then: a. the effective rate will have a compounding frequency equal to the frequency of the nominal rate. b. the loan which charges interest more frequently must have the higher effective rate. c. the loans will have the same effective annual rates. d. the effective rate will be lower than the nominal rate for both loans. e. the loan with more frequent compounding will have a lower effective...
PLEASE ANSWER THIS QUESTION AND MOST ANSWER TO QUANTITATIVE PROBLEM THANKS YOU Different compounding periods, are used for different types of investments. In order to properly compare investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The -Select- v interest rate is quoted by borrowers and lenders, and it is...
PLEASE ANSWER THIS TWO QUESTION THANK YOU Different compounding periods, are used for different types of investments. In order to properly compare investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The nominal interest rate is quoted by borrowers and lenders, and it is also called the annual percentage rate...
EFFECTIVE ANNUAL RATE EAR = An interest rate that reflects annualizing with compounding figured in. EAR = (1 + APR/m)m - 1, where APR = Annual Percentage Rate and m = compounding frequency A loan is offered with monthly payments and a 10% APR. What is the loan’s Effective Annual Rate: EAR = ?
For nominal interest rate of compounding is continuous. Show your solution 3. %, effective annual interest rate will be 12% when 4. Under what conditions APR will be different from EAR? L. Shark is designing a new account that pays interest quarterly. They wish to pay effectively, a 16% per year on this account. L. Shark desires to advertise the annual percentage rate on this new account (and not the effective rate, since their competitors state their interest on an...
For nominal interest rate of compounding is continuous. Show your solution 3. %, effective annual interest rate will be 12% when 4. Under what conditions APR will be different from EAR? L. Shark is designing a new account that pays interest quarterly. They wish to pay effectively, a 16% per year on this account. L. Shark desires to advertise the annual percentage rate on this new account (and not the effective rate, since their competitors state their interest on an...
Edward Lewis borrowed $15,550 from a bank for three years. If the quoted rate (APR) is 5.40 percent, and the compounding is daily, what is the effective annual interest rate (EAR)? (Round answer to 2 decimal places e.g. 15.25%. Use 365 days for calculation.)