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Decide whether the following statement make sense for is clearly true) or does not make sense or in clearly se). Explain My f

Decide whether the following statement makes sense (or is clearly true) or does not make sense (or is clearly false). Explain

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Answer #1

Effective annual rate = (1+periodic rate)^number of periods -1

=(1+7%/12)^12 -1

= 7.23%

The Answer is

B. this makes sense because an average annual return of 15% is greater than 7%

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