Multiple Choice
Which of the following mathematical equations is used to compute the effective annual rate (EAR) ?
A) EAR = (1/Periodic rate of interest) number of borrowing (interest) periods in one year - 1
B) EAR = (1 + Periodic rate of interest) number of borrowing (interest) periods in one year - 1
C) EAR = (1 - Periodic rate of interest) number of borrowing (interest) periods in one year - 1
D) EAR = (1 + Periodic rate of interest) number of borrowing (interest) periods in one year + 1
E) EAR = (1 - Periodic rate of interest) number of borrowing (interest) periods in one year + 1
Correct Answer:
Verified
Correct Answer:
Verified
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