What is the difference between the annual percentage rate
(APR) and the effective annual rate (EAR)? Which rate do you
believe is more relevant for financial decisions and why?
Explain the difference between the Annual Percentage Rate
(APR) and the Effective Annual Percentage Rate (EAR).What would cause the EAR to be greater than the APR?When would the APR and EAR be the same?Can the APR ever be greater than the EAR?
1.Can effective rate be greater than the nominal rate?
(Given the following notation: annual compounding: M=1, semiannual
compounding: M=2)
A. Yes, only when M=1
B. Yes, only when M>1
C. Yes, only when M>2
D. No, effective rate equals the nominal rate regardless
of M values
E. None of the above
2. Sue now has $125. How much would she have after 8
years if she leaves it invested at 8.0% with annual
compounding?
A. $205
B. $216
C. $231...
(a) Calculate the effective annual rate (EAR) for each, given
the nominal rate of 12%
(APR) and the following compounding frequencies: (I) quarterly
(II) monthly (III) daily.
(b) Calculate the nominal rate (APR) for each, given the
effective annual rate of 12% (EAR) and the following compounding
frequencies: (I) quarterly (II) monthly (III) daily.
(c) Calculate the periodic rate in percent for each, given the
nominal rate of 12% (APR) and the following compounding
frequencies: (I) quarterly (II) monthly (III)...
An interest rate is 7.50% per annum with annual compounding.
What is the equivalent rate with continuous compounding? (Answer is
in percentage with two decimal place - example 5.35)
What is the EAR (effective annual rate) of 9.60 percent
compounded quarterly?Group of answer choices9.68 percent9.92 percent9.83 percent9.71 percent9.95 percent
a. What is the effective annual interest rate (EAR) of the APR
of 10.5% given that it is compounded quarterly? Monthly? Annually?
Daily?
b. If you purchase a new home for $250,000 today, what is your
monthly payment if you have to pay 4.25% annual interest compounded
monthly? Assume a 30‐year fixed mortgage (360 months) and 25% down
on the home (this is of the purchase price above).